It is important to clarify something here.
While mainstream economists, the financial media, academia, and other gatekeepers of the rotten fiat currency system howl about the dangers of deflation, it is worth taking a moment to consider whether it is really such a bad thing.
First, it is important to define our terms.
The correct and true meaning of inflation is an increase in the money supply. So the correct and true meaning of deflation is a decrease in the money supply. But that is not what most people mean when they refer to deflation, because the money supply rarely contracts in a fiat monetary system. When most people say deflation, they mean a general fall in prices.
One of the biggest popular misconceptions in economics is that a general fall in prices is a “bad thing.”
It is an enormous misnomer. Falling prices caused by increases in productivity are actually a good thing. Who does not want to see their money go farther?
Technology is naturally deflationary. It drives down costs, increases efficiency, and makes goods and services cheaper over time.
In an honest monetary system, that would mean falling prices and rising purchasing power. In other words, your money would buy more as technology advances.
But that is not how the current system is designed to work. In fact, it does the opposite. It is like running on a treadmill that keeps accelerating.
In a fiat currency system, deflationary increases in productivity are more than offset by inflation, which benefits people who own stocks, houses, and other assets that rise with inflation, and hurts those who depend on wages denominated in the debased currency.
In short, in a fiat currency system, the benefits of deflationary technology primarily accrue to asset holders, because the forced inflation created by central banks pumps up asset values.
Hellbound and Down 