[stevenmays]

If money were an infinite resource it would have no value. Sure, governments have the ability to print more but they are constrained by inflation targets. And sure, more liquidity was put into the markets but that's because the markets had no liquidity and we were on the brink of financial disaster and deflation was on the verge of occurring. In deflationary events no one buys anything because the price tomorrow is cheaper then the price today so everyone waits to buy while businesses are unable to move their products and tons of people lose their jobs.

There are other circumstances at work here then more money in circulation, such as land use restrictions, building codes, nimbyism, credit costs/restrictions, tax policies, etc. If investors can build housing and make money they will certainly do it. It's not just the supply of money, but also the supply/demand of a product that effects prices.

[mrob]

>In deflationary events no one buys anything because the price tomorrow is cheaper then the price today

Computer prices have been rapidly deflating since before I was born, but I've bought several computers. Deflation only prevents purchases when the savings from waiting outweigh the cost of not having the item.

[aangjie]

>Deflation only prevents purchases when the savings from waiting outweigh the cost of not having the item. reply

Very true, but it simply is a semantic gap. I suspect(not know) most economics students are taught 'deflationary scenario' or 'deflation' is when savings from waiting outweigh (cost of not having the item or benefit of having the item).

[pakitan]

When someone says "no one buys anything", deflation proponents always twist that as if it's meant literally. The economy doesn't halt when there is a deflation. It just slows down, people buy less, then, because of the low sales, companies lay off employees, so people buy even less...and so on.

[AznHisoka]

"It just slows down, people buy less, then, because of the low sales, companies lay off employees, so people buy even less...and so on"

.. which frees up resources into products/industries people value more. Why is that a bad thing vs people overspending a lot to buy things they might not need? To much deflation is bad but how about a stable money supply with very low (if any) injection of money by the government?

[pakitan]

You can easily see how well the reality matches your forecasts by going back to 2007. Did the masses of unemployed people seem happy to be freed from the burden of "overspending"?

> how about a stable money supply with very low (if any) injection of money by the government?

Majority of money supply in existence is some form of debt. I have $1000 cold hard cash, I put it in a bank and the bank then lends it someone else. Now there are $2000 in existence. Central banks don't and can't control this process directly. This is the vast majority of money out there. The amount that CBs prints is really tiny in comparison. In fact they are aiming at exactly what you suggest - some relatively low inflation rate but they tend to overshoot because they can't get the precise inflation rate they want and undershooting makes the process much harder to control. The fact that money is debt is exactly the reason you're now seeing inflation in US, even though the Fed stopped printing money long ago. Now they'll be starting to reduce money supply but you'll continue to see inflation rise until some sort of equilibrium is reached or (more likely) next bust comes. The money printing is supposed to act as a sort of confidence boost in recession/depressions but now that confidence is back, the money supply is growing and growing even though money printing has stopped.

[mehwoot]

It just slows down, people buy less, then, because of the low sales, companies lay off employees, so people buy even less...and so on.

Good. I think the world could do with less consumerism.

[caf]

Could it also do with more angry underemployed people?

[mehwoot]

Yes, definitely. I think our current consumerism is unsustainable and will either kill or mostly ruin us and the planet. More unemployed people will either lead to us realising we don't need to constantly be consuming more, or revolution into a more sustainable society. I'd take either over what we have now.

[jesusthatsgreat]

The problem is the rules are made up as we go along. Money is infinite if we want it to be infinite... at the minute it's finite up until a debt ceiling is hit. And as we've seen before, we just keep raising that ceiling if it looks like we'll run out of money and can't afford to keep society operating properly.

People don't have a say in who or what is 'saved' by printing money. Or where the new money goes. A handful of people decide, most of whom are in a very comfortable position in life and quite often have vested interests in maintaining the status quo. After all, it works for them and got them to where they are, so very few people would do something to jeopardize their own wealth / position. How many politicians own more than one property for example? Are they really going to voluntarily introduce measures to lower property prices in the interests of the younger, less well off people / families?

I agree an entirely deflationary monetary system isn't the answer however the more you print money, the more you're effectively saying "It's no big deal if you get in to debt, we'll just create more money to clear it like we did the last time and the time before that".