Reminder: Deflation driven by increasing productivity should be an amazing thing for any society. (Even better if it is technology driven) The only deflation we need to avoid is the type that is caused by a cascading collapse of the banking system.
I've been saying this for 20 years, but people often disagree, using what seems like macro hand-waving (negative interest rates, hoarding cash, deflationary spiral?) that I don't understand well enough to refute.
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Deflationary spirals have historically occurred in credit crunches. It would be wonderful if we could get anything close to the deflation people worry about based on tech progress alone - we haven’t seen tech making much of a dent in the macro health/govt/edu spending numbers.
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Ditto — but I’ve only been saying it for 10 years ;). Seriously though, what do either/both of you make of the “hoarding cash” problem? (If indeed it’s a problem...)
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Hoarding cash only becomes a real problem when the credit system is actively imploding. If it is a main factor in a credit crisis it isn’t happening because increased productivity caused lower price levels.
End of conversation
New conversation -
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The argument is that deflation incentivizes holding cash in place of investing/consuming. This is considered axiomatically bad based on standard assumptions. (It's not axiomatically bad)
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