it seems there is an irrational fear of "good deflation". what people are afraid of is the deflation-depression like in 1929+, but before 1900 there was regular deflation which was not so evil.
currently the "Airbnb deflation" is giving value to the people by reducing prices of goods and service... the problem is not inflation or deflation, but rigidities in prices and rates, in contracts, compared to price. inflation is a way to break rigidities in too high wages, too high rates deflation is natural and sane in economies where there is growth of productivity. This is a good way to increase wages. one fear is that deflation push people not to consume, but if deflation is on goods that you need immediately and consume, delay is absurd. deflation in housing may be a problem for investors, but deflation of rent, of vegetables, meat, even of cars or computers, is not a problem. 2015-08-13 5:01 GMT+02:00 Eric Walker <eric.wal...@gmail.com>: > On Wed, Aug 5, 2015 at 2:11 PM, Jed Rothwell <jedrothw...@gmail.com> > wrote: > > I know little about economics, but limiting the amount of money based on >> the amount gold we have -- or the number of bitcoins -- seems like utter >> lunacy to me. It never worked in the past. There are two reasons: >> >> 1. The money supply has to increase when there is more economic activity >> and more people, or you get severe deflation. This happened in the U.S. and >> other countries on the gold standard. Severe deflation is a bad thing. >> > > This is the reason I've never understood the appeal of gold or bitcoin. > The urge to take the control of the amount of money in circulation out of > the hands of central banks seems to disregard the danger of deflation. > > Eric > >
