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Nobody is going to buy anything if the costs will be lower tomorrow.
Better notify the computer and electronics industries before they go bankrupt!
Ha! Excellent retort, Von Bigmeat.
Yes, I should have taken the time to mitigate that general rule, but listing the exceptions to that general rule (as in your example) is asking a bit much in this venue, agreed?
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Nobody can afford to borrow money if the dollars they have to pay back tomorrow are wildly more valuable than the dollars they borrowed yesterday, either.
Not really, it's just another factor to consider when markets of borrowers and lenders set the interest rate. If money is slowly becoming more valuable for everyone, then we would expect banks to have lower stated interest rates* than they do now, which was the case in the 1800's.
Please no NOT crucify American farmers on that cross of gold, Von bigmeat.
Nuf said?
* Stated interest rates: The actual number quoted by the bank. As opposed to the real interest rate, which takes inflation/deflation into consideration. ie 3% interest rate + 2% deflation = 5% real interest rate.
True... Now what happens when the amount of new good and services is being balanced against a static amount of gold?
Do you suppose the banks will charge negative rates of interest to lenders to reflect the fact that the dollars repaid are much much more valuable than the dollars they loaned out?
(I mean it could happen, I suppose, but it would take a serious change in customary expectations from the banking community)
There are different types of deflation just like there are different types of inflation. The slow, steady decline of prices due to productivity improvements and technological breakthroughs (for example, mass-produced bread ) is a good thing. That's how the standard of living increases.
True, but we were talking about deflation in a SPECIFIC circumstance...one where we pegged the amount of specie in circulation to a static amount of gold in the vaults in a scoiety where production and population was increasing the amount of good and services.