| > This is just a big lie thrown in my face! > please correct me if I'm wrong!!! You're wrong. Deflation is basic economics. If you take a college macroeconomics course it will be covered. It's hard to summarize in a way that will convince you in an internet debate. Sort of like trying to argue electromagnetism with someone that never learned about Maxwell's equations. An econ textbook would be ideal, but another place to start would be: http://en.wikipedia.org/wiki/Deflation (By the way, no offense intended with that. It's hard for anyone to comment on a scientific subject if they didn't learn the background, even super smart folks.) There are several things wrong with your story, but the first one that jumps out is that some prices are more sticky than others. For example, wages are likely to not go down much, instead firms tend to cut employment. There's a lot of evidence for this: http://en.wikipedia.org/wiki/Nominal_rigidity. Another big factor is the effect of debts, which are not reduced: http://en.wikipedia.org/wiki/Debt_deflation Here's another summary on deflation, intended for a popular audience:
http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation... |