[SkyMarshal]

That bit of economics common knowledge was also developed before our modern, dynamic, fast, globally interconnected economy. I'm sure there's still some technical truth to it, but I wonder if it's as true now to the degree it was back in, say, the Depression era.

It would be interesting to see how a currency with a set rate of deflation instead of inflation worked now. Say your money gained 3% per year purchasing power instead of lost it, everyone would be incentivized to spend or invest it in ways that returned either ROI or utility worth at least 3% per year, or otherwise hoard it. Spending and investment (or at least malinvestment) would slow, but capital formation would increase.

Too bad there's no way to test such a thing, see how it works out in practice. BTC unfortunately does not seem to provide a stable rate of deflation, at least for the foreseeble future.

[dragontamer]

You mean... the Japanese Yen?

Nintendo and Sony posting record losses as the Yen continues to get stronger and stronger. The $200 Wii console sold the best in 2010 and 2011, but because the Yen deflated so much Nintendo lost money on the USD -> Yen conversion and overall didn't do so well.