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Someone at Bloomberg actually gets it?

Submitted by austrianschool on Thu, 08/27/2009 - 19:54
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http://www.bloomberg.com/apps/news?pid=20601039&sid=a_IZywsb...

Pretty fair job.

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Last three paragraphs summarize this good article.

Submitted by Qwerk on Thu, 08/27/2009 - 20:06.

"On the other hand, deflation is good news for savers, who get richer just by hanging on to their cash. And it is beneficial for consumers, who get cheaper prices. It is usually good for workers as well, as they can generally hold the value of their wages, even while prices fall.

There are winners and losers, just as there are from most economic developments. The important point is that the people who lose are more powerful than the people who gain. That might explain why we hear about the dangers of deflation, and not about its advantages. It still doesn’t make them right.

There is no threat from deflation. It may even be desirable if it encourages a balance between saving and consumption, and discourages governments and banks from taking on debt." http://www.bloomberg.com/apps/news?pid=20601039&sid=a_IZywsb...

Yes, I agree. One of the things he mentioned regarding

Submitted by austrianschool on Thu, 08/27/2009 - 20:38.

deflation concerns the tendency for it to discourage the taking on of debt, especially long term debt. One of the examples often used, in order to help paint an ugly and destructive looking face on deflation, concerns the post-Civil War settlement and farming operations in places like Kansas and the coming of the industrial revolution. As newer technology became available, cutting time and labor costs in plowing, planting and harvesting, many farmers acquiring this technology found out that the price of the equipment was a mortgage on the family farm. The equipment was indeed productive; so productive, that great surpluses were produced and prices fell. The dollar could then buy increased amounts of such commodities and the farmer's debt, relative to things like bushels of wheat or corn or whatever, was that much harder to pay off. Many farmers went under, repeating the phrase: "In God We Trusted. In Kansas We Busted".

Also interesting about that period is the platform of the People's Party that had considerable support in that part of the country. They advocated for: Changing the way that the U.S. Mint distributes currency so that enough money was always available (sound familiar?), creation of a progressive or graduated income tax, government ownership of railroad, telegraph and telephone, direct election of U.S. senators by people, etc. I'm sure everyone has heard of these platform positions before.
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"An economy built on fiat money is a society on its way to ashes."

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"An economy built on fiat money is a society on its way to ashes."