Quote:
Originally Posted by Splorf22
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Isn't it a good thing when stuff gets cheaper? Sure I agree a small constant deflation is probably bad but its much much worse to have a government in charge of printing money whenever they feel like it.
And Hitchens, in my humble opinion the entire economics professions should be taken out and shot for crimes against humanity. There is a reason there was no Nobel prize is economics - 90% of it is unscientific blather which is used by people who run our country (i.e. the bankers) to justify looting and plundering.
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Deflation tends to make goods cheaper in terms of the amount of currency spent on the item, however consider the effects of this on an economy in the aggregate. Being paid less for your goods results in less income, and because you have less money, salaries (and everything else) must lessen to reflect this reduced income in terms of the number of dollars coming in.
That said, if $0.95 buys the same thing that $1.00 would have a year ago, there doesn't seem to be much of a problem. In terms of absolute buying power, everyone has the same amount.
The problem is most visible in areas where the currency is dealt with in absolute invariant numerical terms. IE: debt. If you owe $100 today, your money is worth less next year but you still owe the same $100. This means that the absolute debt becomes increasingly burdensome.
That said, inflation also reduces the value of a person's savings and it is also arguably terrible. However, strong inflation tends to be less disastrous than strong deflation. Inflation means all debts are cleared more easily whereas deflation leads to all debts stagnating.
Both are sides of the same coin and both represent a problem if left unchecked. Our current society has been constructed via the use of debt and leveraging and its benefits are undeniable to our current capitalistic model. Inflation is simply more controllable and less harmful to our current social construction.
Our government also favors inflation as it gives them more to play with. Control of the money supply is a vital tool under most modern economic models. If you're interested in ideas or constitutional amendments to fairly and justly control the expansion of the money supply, I suggest you read
Free to Choose by Milton Friedman, specifically chapter 9: The Cure for Inflation.