[diego_sandoval]

> your paycheck--the dollar amount you brought home--would be cut in half. However, your car payment, your mortgage, and your credit card bills would stay at the same nominal value.

Not necessarily. If the transition to a deflationary economy is slow and planned, then expected deflation would start to be considered in the interest rates of your car payment, mortgage, etc. i.e. interest rates would become negative not long after inflation becomes negative.

If employers are capable of negotiating deflation adjusted salaries, then market pressure is capable of forcing companies to adjust their prices and interest rates to deflation.

[rhelz]

> If the transition to a deflationary economy is slow and planned,

If your money is guaranteed to grow in value--and without the risk of actually investing it--that would starve the economy of investment, which would reduce economic growth. People would hold back on their consumption (why buy it today, when tomorrow it will be cheaper??), further reducing demand, which would further depress prices, etc in a doom cycle.

That conclusion wasn't reached by extensive investigation of economists belly-buttons. Its observed fact and lived experience in every deflational economy ever observed.

And if you think Banks are just going to forgive your debt if your salary decreases, you are nuts.

[ponow]

We should use debt only as much as necessary. Normalization, promotion, even subsidy of debt leads people to make poorer choices and to think in the short term. It destabilizes the world, and sets up traps for the many naive people, traps that benefit lenders.

[rhelz]

Well, an influx of money can be a bad thing too: 1/3rd of lottery winners go bankrupt within 5 years of winning...I knew somebody who gave their kid a sports car on his 16th birthday...a week later he and his car were pulled out from under a semi truck...

Whether something is good or bad depends on how well or how poorly you use it. Its not intrinsically good or bad.