I would add also that currently central bank are desperately injecting keyneisian money to stop depression, and deflation, but all it does is inflating assets values, not prices.
this is benefiting finance and crony capitalism, not real economy which suffer from bad investment decisions. people asking for gold (I find it stupid) or electronic curencies where central bank cannot manipulate the primary monetary mass do to prevent cehtral bak to promoting crony practices like today. my feeling is that it cannot work, because M3 money is not printed or even mined. someone explained how you can create money in a sane economy (and I understood why there is no inflation despite tons of paper printed). imagine that you are in a world with real great opportunities, like farming rice with neolithic technology. the idea is that as soon as you have money, even if the mass is small, you pay someone to work, and this man have money, that he can consume, or invest. this gives money to people who can buy or consume... if people have many thing to buy or to invest and always work to do that is productive, the money wil circulate very quickly. deflation in 1929 was because people stopped buying goods, buying work, to look less indepbted. hyperinflation in germany was on the opposite becaus epeopel lose trust in deutchmark and immediatemy bought goods with money, to people who do the same ASAP. monetary mass is not the key factor... key is the speed, and the opportunities or fears. if there is opportunities to create value, money will flow, and be reused hundred of time a month. if people are depressed they will keep it dying on an account. only hope is the bank reusing it (where fractional banking is useful), but if people invest them in dead value (bonds on dayly state expenses) it will not flow anymore. if people are terrorised on the opposite money will flow frantically like false notes. today we have strandes asses that are exchanged frantically creating asset bubles. on the opposite there is depressed economy which make real economy deflate because nothing real seems productive. central bank don't solve, but feed, those problems. 2015-08-13 10:25 GMT+02:00 Alain Sepeda <alain.sep...@gmail.com>: > 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 >> >> >
