Quote from: boumalo on July 03, 2014, 09:43:36 PM

Quote from: tee-rex on July 03, 2014, 09:07:29 PM

Quote from: boumalo on July 03, 2014, 08:46:21 PM

Quote from: tee-rex on July 03, 2014, 07:43:03 PM

Quote from: boumalo on July 03, 2014, 07:31:41 PM

Quote

You say what you think people should do. But I say what actually happens and has happened many times in the past. This may seem counterintuitive and working against logic, but human psychology is not about logic. And it is surely not what you think it should be.

Do you buy less when the price goes down? Give me exemples of when YOU buy less when the price goes down!

You seem to be missing the whole point. It is not a question of buying less, it is a question of saving more! When prices go down, people (me included) don't necessarily buy less, but they do save more shrinking from additional expenditures and consumption that you would expect from the fallen prices. And this has been known since long ago (and written in the textbooks, by the way).

And this is enough to cause negative or even devastating effects on the economy.

Read your message twice but am still not sure if it's a joke or not : if you buy as much and you save more it is a bad thing?

If you think it a joke, I don't think we're going anywhere, sorry. Additional savings due to prices falling reduce producers' profits. This can only be compensated by expanded consumption (provided all other things being equal), but as I said before, increased saving evidently holds back this.

And consumption is an investment by itself, but saving postpones it, so that you can't have it both ways, whether you like it or not.

Consumption is not an investment and do you prefer a nation of consumers and borrowers with a weak economy or a nation of producers and savers?
Saving didn't hold the States of becoming the first economy; going into debt to consume will make them fall of the most wanted first place
Prefer the latter; the USA was the latter, enjoyed many liberties, low taxes and small government and that is what made this nation so great; now they have consumers, debts, unfunded liabilities and they produce less and less; it will only be justice when the hard workers and savers of this world like chinese will enjoy wealth, consumption and a strong currency

If so, then how people are going to invest later according to your own words, that is "savings are good because they will be reinvested"?

And as I understand, now you don't deny that savings will increase even if prices are falling, right?