Okay, so you have products that get cheaper and cheaper. Is that good? No, the computer industry is in a deep crisis because of that – first PC sales tanked, then laptop sales, then netbook sales, then ultrabook sales, then tablet sales, soon smartphone sales… if products get cheaper and cheaper, you have no incentive to buy more than absolutely necessary, because not waiting with your purchase will always lose you money.
And then we have the other problems: What about rents? Debts? Wages? Do you decrease them over time, too? What happens if they aren't? Who would lend money under such circumstances, if just keeping the money under your pillow will make you richer anyway, and at zero risk, too?
>No, the computer industry is in a deep crisis because of that – first PC sales tanked, then laptop sales, then netbook sales, then ultrabook sales, then tablet sales, soon smartphone sales… if products get cheaper and cheaper, you have no incentive to buy more than absolutely necessary, because not waiting with your purchase will always lose you money.
Yes, because that's absolutely what happened. What actually happened is that there is no longet any reason to buy the top end, because the low end is enough for most people.
>And then we have the other problems: What about rents? Debts? Wages? Do you decrease them over time, too?
Why should wages decrease?
>What happens if they aren't?
People have more money to spend and the additional demand further boosts the economy.
>Who would lend money under such circumstances, if just keeping the money under your pillow will make you richer anyway, and at zero risk, too?
People would definitely go back to saving and away from making debts. That is not a problem, the need to invest money when there is no objective reason to do so is what leads to investment bubbles and excessive debts.
Sales are down down. Total sales. Not "high end sales". All sales.
> Why should wages decrease?
The economy is growing. The population is growing. Everything is growing… except your money supply. You have to make products cheaper with fixed wages, your personnel costs will explode, until it's no longer affordable to pay the current rates.
Same with rents: Building housing will become progressively cheaper. Rents, land taxes, etc. will have to go down to match these prices, or nobody will be able to afford living in existing housing any more.
> People would definitely go back to saving and away from making debts.
You seem to conflate a lot of issues here. We had inflation with gold standards (because you can debase your currency anyway). We had crashes and bubbles with gold standards (and pre-gold-standard gold based currencies, which you conflate too…). The destruction of the middle class and impoverishment of the lower classes aren't a result of fiat currencies.
> That is not a problem, the need to invest money when there is no objective reason to do so is what leads to investment bubbles and excessive debts.
Except that deflation will result in a shortage of investment even where there is objective need.
>Sales are down down. Total sales. Not "high end sales". All sales.
For how long? A few years? Prices have been dropping rapidly for many decades. Yes all sales are down, because you don't need high end computers any more, which also means you don't need to replace old computers as often.
>The economy is growing. The population is growing. Everything is growing… except your money supply.
Yes, that's why prices get lower to compensate.
>You have to make products cheaper with fixed wages, your personnel costs will explode, until it's no longer affordable to pay the current rates.
That's illogical. If you need to cut wages in order to decrease prices, you aren't growing, you are cutting costs.
>Same with rents: Building housing will become progressively cheaper. Rents, land taxes, etc. will have to go down to match these prices, or nobody will be able to afford living in existing housing any more.
If they will have to drop so be it. But I doubt that the costs of building the house is what determines property prices, it's more about the location.
>We had inflation with gold standards (because you can debase your currency anyway).
No, inflation started after gold standards were abandoned. As you wrote previously, the 1-2% inflation caused by influx of gold from the new world was seen as catastrophic at the time.
>We had crashes and bubbles with gold standards (and pre-gold-standard gold based currencies, which you conflate too…).
Not nearly as often. Yes, bubbles did happen as rare occurences, today they are seen almost as an unavoidable part of the economy.
>The destruction of the middle class and impoverishment of the lower classes aren't a result of fiat currencies.
That's not what I said, but it could be so. Avoiding inflation is much easier for the wealthy after all.
>Except that deflation will result in a shortage of investment even where there is objective need.