[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.