[arthurus]

Neither deflation nor inflation, the same crittur, just different levels-positive and negative- has anything at all to do with those processes or with any sort of productivity or production. None. Not. Inflation is entirely and only an increase in the money supply. That is the definition of the term. If you wish to use it for whatever else comes to mind you are effectively trying to construct analogies that don't work. Increased productivity when the economy is expanding makes for more total production. If the money supply does not increase then prices fall. That is not deflation. It is a reduction in the price level because the same money is chasing more goods. If the money supply is increased at the same rate that production increases then you have absolute inflation but no relative inflation. You have a stable average price level. When (not if) the government increases the money supply at a higher rate than the increase in production then you have Iinflation, relative and absolute. When production is decreasing and the money supply is increasing you have Keynesian prosperity i.e. the numbers all show "expansion" but prices are rising generally and people in the real world are tightening their belts and losing their jobs i.e. becoming poorer.

The definition of Inflation/Deflation is a textbook thing. In the basic economics textbooks it is purely the increase/decrease in the money supply. In MBA-Finance textbooks it is confused with any sort of increase or decrease in prices, and value. Keynesians, who write most of the finance books do not and really cannot distinguish between a rise in a particular price and a general price rise and changing quantities of money in circulation.

[muawiyah]

Here's what happens when you improve productivity, prices drop.

When they drop fewer dollars are used ~ meaning more dollars are saved.

Due to the magic of cashmoney dollars that go into savings are quite effectively taken out of the rat race to BUY CONSUMABLES and can be turned into CAPITAL.

People borrow capital to do stuff ~ like purchase more efficient machines, or better housing.

If, on the other hand, you degrade productivity ~ like tax it more ~ (which happens when sales tax receipts are insufficient and they raise sales tax or inventory tax rates) ~ folks have to take money out of savings to pay more for the targeted products or services.

That reduces capital savings and makes the purchase of more efficient machines more difficult.

To some it looks like there's been a change in the money supply ~ when actually, the government has simply raised the price.

It's on rare occasions that you find the simple ADD MORE MONEY TO THE SUPPLY situation, and even rarer to find the simple TAKE MORE MONEY OUT OF THE SUPPLY situation.

The usual situation is muddied by taxation, and the effects might appear differently than anticipated.

Obama and his running dog lackeys are trying to get taxes raised ~ and for no reason whatsoever. There are plenty of federal government assets to pledge against current outstanding bills and debts.