[kristianbrigman]

> Inflation or deflation, by definition, doesn't impact how much someone can buy in real terms. Because wages and goods are theoretically changing at the same rate.

From your earlier post: > Frankly I suspect that if prices go down all else equal most people will be better off and able to afford more stuff. Wild take, I know.

As you mention above, this isn't likely to actually be that different.

But:

>In practice though inflation policy is typically masking money printing projects or policies that destroy wealth

Inflation rewards moving money into goods, and deflation rewards moving money out of goods. Generally, an economy where money moves around is better than one where it sits idle. Yes, it does penalize saving cash (), which offends many puritan mindsets (including mine), but it rewards risk-taking and committing your currency towards capital, both of which tend to make the economy more productive.

() - So, if your 'wealth' is in currency, then inflation does devalue your wealth. But if your wealth is in capital, that capital should fluctuate with the currency, and inflation doesn't devalue that.

[roenxi]

Heh, you noticed. I was being a bit sneaky in my word choice [0] there - the commonly used measure is the CPI [0] which doesn't include wages - so in practice it would often measure "deflation" which is really just prices going down due to technology improvements and people becoming better off. Think what has been happening in the tech world for however long. If not for pro-inflationary policy the overall economy would tend to stable prices except for massive drops in the cost of tech goods, leading to measured "deflation" (not really deflation but error in the measure) and people getting wealthier.

That was why I said "prices go down" instead of "deflation" - because the measure in practices is a price basket which doesn't directly include wages.

> But if your wealth is in capital, that capital should fluctuate with the currency, and inflation doesn't devalue that.

In the abstract, yes. In practice, after you factor in the interactions with capital gains tax it actually means there is a wealth tax (transaction tax? Extra tax on the principle, anyway) which is relatively punishing to anyone trying to save for their old age.

EDIT [0] With benefit of 24 hours hindsight, it would have been more proper to say "consumer prices" to distinguish the CPI from inflation.