[StandardFuture]

> One pedantic point

Your point is not pedantic at all and in fact completely negates the other commenters counterpoint made to your initial argument.

The buying power of the entity you are exchanging in has changed -- for everyone. This absolutely does not diminish your work. It is literally equivalent to being paid in many more bitcoin in 2012 versus today.

I am sure there are valid critiques of allowing deflation. But, as of yet a solid one has not been provided in this thread.

It would be interesting to see if anyone can offer other sources or arguments against this pro-savings, deflation-allowable, economy.

Allowing natural volatility into the value of any asset that is traded, including the USD, likely resolves to a more natural equilibrium in the economy, no?

[pram]

Deflation causes many problems. For starters at a macroeconomic level it reduces money velocity and investment. If people will make a better return just holding onto their money, then they will be more averse to spending it obviously.

[StandardFuture]

> reduces money velocity and investment

Yes, this is because of the interchangeability of the value of an asset declining and the fact that no one is buying it. No different than a stock price in free fall. Why is it in free fall? Because no one wants it.

Artificial infinite inflation takes away from the buying power of especially younger generations (but average people in general). It inflates the supposed price of assets (in terms of the inflated exchange asset, e.g., USD) which makes it much more difficult for newcomers to gain access to the necessary amount of buying power otherwise.

Think of it like inflating bitcoin. True, bitcoin is worth more. But, it takes a lot more work and time to get more bitcoin. This actually causes deflation to people's labor value and thus their buying power and leverage.

And not all assets will inflate equally. And some assets will receive government subsidies (this is an increasing phenomenon due to the inflating economy) because they are considered "critical" to society e.g., gasoline, milk, and green energy.

Overall, allowing things to deflate and inflate more naturally actually increases volatility which is actually what will increase economic velocity. Trading will increase, and interest will increase because of profitable trading, and thus investment will increase.

So, no, the current artificial and centralized system that thinks it can outgame game-theory is just stupid.

It's just Neo-Liberal/Neo-Conservative hippie baby boomer nonsense to concentrate wealth and power into an aristocratic elite empowered by trillions of dollars of managed retirement portfolios. They simply do not want to allow for natural volatility so that their managed assets are always increasing. It's absolute insanity.

EDIT:

Not that my above comment was perfect, but let me attempt to be more succint.

> Monetary appreciation only helps

Appreciation of an asset only helps the holders of said asset. But "appreciation" is always an exchange rate. Appreciated relative to what?

> A deflationary environment explicitly benefits creditors.

And this is where my contention lies. This dogmatic condemnation of deflation ever being allowed to happen. Temporary deflation or even deflation for some extended period of time is not a bad thing.

Economic velocity runs on volatility and not what one currency or asset is doing relative to another. Inflating and deflating exchange rates only increase volatility. But, truly, only if both types of relationships are allowed and are not artificially snuffed out by government and/or central bank intervention.

And you assume that creditors are the only ones holding an asset? Credit is only one kind of exchange. Spending is another. Stock trading is another. They all depend on volatility.

Thus, I am not arguing for inflation or deflation. I am arguing for the greatest amount of allowance for natural volatility.

> in your proposed monetary environment.

I see that you assumed that I was arguing for constant monetary appreciation. I was arguing that there is nothing wrong with monetary appreciation.

It seem that you and others are deadset on arguing that all deflation is immoral.

My above comment mentions the common root of such views.

> Much like it's difficult for newcomers to buy large amounts of bitcoin.

Yes, I should clarify my bitcoin comments. Bitcoin is deflationary relative to USD (where most "newcomers" are coming from).

BUT, to add substance to my point it should also be noted that there are coins that outperform Bitcoin and are thus deflationary in their relationship to Bitcoin. A newcomer holding these would actually have more purchasing power.

I clarify this to stress that at the end of the day: consumer spending, loans, credit, etc. are all trading. And trading is what makes the economy go around. Volatility is good.

[pram]

I'm not really sure what you're arguing, I didn't say "infinite inflation" is good lol. Monetary appreciation only helps the buying power of people who already have money. A deflationary environment explicitly benefits creditors. It would be very difficult for a newcomer to get buying power, leveraged or otherwise, in your proposed monetary environment. Much like it's difficult for newcomers to buy large amounts of bitcoin.

[StandardFuture]

Not that my above comment was perfect, but let me attempt to be more succint.

> Monetary appreciation only helps

Appreciation of an asset only helps the holders of said asset. But "appreciation" is always an exchange rate. Appreciated relative to what?

> A deflationary environment explicitly benefits creditors.

And this is where my contention lies. This dogmatic condemnation of deflation ever being allowed to happen. Temporary deflation or even deflation for some extended period of time is not a bad thing.

Economic velocity runs on volatility and not what one currency or asset is doing relative to another. Inflating and deflating exchange rates only increase volatility. But, truly, only if both types of relationships are allowed and are not artificially snuffed out by government and/or central bank intervention.

And you assume that creditors are the only ones holding an asset? Credit is only one kind of exchange. Spending is another. Stock trading is another. They all depend on volatility.

Thus, I am not arguing for inflation or deflation. I am arguing for the greatest amount of allowance for natural volatility.

> in your proposed monetary environment.

I see that you assumed that I was arguing for constant monetary appreciation. I was arguing that there is nothing wrong with monetary appreciation.

It seem that you and others are deadset on arguing that all deflation is immoral.

My above comment mentions the common root of such views.

> Much like it's difficult for newcomers to buy large amounts of bitcoin.

Yes, I should clarify my bitcoin comments. Bitcoin is deflationary relative to USD (where most "newcomers" are coming from).

BUT, to add substance to my point it should also be noted that there are coins that outperform Bitcoin and are thus deflationary in their relationship to Bitcoin. A newcomer holding these would actually have more purchasing power.

I clarify this to stress that at the end of the day: consumer spending, loans, credit, etc. are all trading. And trading is what makes the economy go around. Volatility is good.

[pram]

Appreciation due to contracting supply. In a fractional reserve system, if monetary velocity is low enough the total supply naturally shrinks. This is the "pro-savings, deflation-allowable" economy I am responding to. Money can appreciate in the sense that there is literally less of it to be spent on things, in aggregate. It's a pretty basic econ 101 supply and demand problem.

Aggregate demand and supply is very much affected by currency and commodity appreciation, contrary to what you're saying. Additionally there is volatility, and there is price discovery. Today, right now. Things are already how you want them to be. The dollar depreciates and appreciates against commodities and other currencies all the time.

[StandardFuture]

> The dollar depreciates and appreciates against commodities and other currencies all the time.

Bingo! But, I do not see anyone complaining about this "only benefiting the creditors".

> econ 101

To be fair, I find a reference to very weakly approximating models of reality, taught to ignorant and naïve students for the sake of starting them off somewhere, to be slightly disingenuous.

> Appreciation due to contracting supply.

Contracting supply is not the only reason for appreciation. If we take that fact into consideration then your causality arrow of 'low monetary velocity' -> 'supply shrinks' -> 'appreciation' is one of many possible paths. Therefore, deflation is not what causes appreciation, it is in of itself a description of that very appreciation. Again, appreciation RELATIVE to something. You seem to be ignoring this very important fact.

You also created circular thinking. In a prior comment you said the deflation causes monetary velocity to fall, and then you say monetary velocity causes appreciation. Appreciation is where the deflation comes from. So, which is it? Deflation pops into existence and causes monetary velocity to fall? Or a magical appreciation occurs from a slowing monetary velocity and causes deflation to occur?

> In a fractional reserve system

Yes, in a central banking system the 'monetary velocity' is artificially controlled. Almost completely. You can push money into parts of the economy to inflate things at a whims notice. Then everyone loves that the "values" of investment vehicles are bigger than they were yesterday.

So, you are effectively only arguing for the status quo. But the status quo is not working. Is this really your best argument?

> volatility, and there is price discovery

Ah, word games. Even if someone might provide definitional differences, there is no objective real-world difference between the two things.

---

Here is what I argue for:

Not allowing natural (not managed) volatility (or 'monetary velocity') -- MOVEMENT -- is a fool's game. You cannot beat basic game theory that is dependent on the biology of humans. You just can't. There is no fancy economic jargon that can allow you to. There is no monetary policy that will enable you to. You can pitch and sell artificial manipulation of the economy (via economic theories or political ideologies) but you are only pitching bubbles.

Allowing natural periods of deflation in the economy allows for volatility, trade, flux, interest, investment, wins, ... and here is the most important word: losses.

Loss. It allows for someone to actually lose.

These hippie boomers have never had to lose anything in their lives. The artificial manipulation of the markets and the economy reflects this mindset and attitude.

There is more than one currency and that fact alone negates any possible argument against allowing deflation to occur naturally in the economy. If it occurs because of temporary "contracting supply" (of one currency) then so be it.