Deflation is a bugaboo to Keynesians and oligarchic thinkers because declining prices, which are a net neutral market phenomenon, is not inflation which enriches those at the top, bankers and such, who are allied with the nations’ fiat money sources. Declining prices are a result of increased and more efficient production in a stable money world. As such they are not actually deflation. Keynesians and bankers, however, define prosperity as rising nominal prices and from that are prone to warp the markets into inefficiency but that always benefits the bankers. Government and bankers believe “proper” inflation to be about 3%, enough to give the bankers, etc. a continually increasing share of total wealth without having to produce more while maintaining stability of markets and societies.
I remember six years of school where I had to buy lunch(1950-56). Twenty Five cents a day purchased one hamburger a bowl of stew and a soda at one of the local restaurants, that was true for all those six years.
I’m ready for some food prices to deflate but that isn’t going to happen. They never come down even when they can and should.
I’m sick of partially filled containers of all manner of foods. What do we do?
PS, we had little inflation until tricky dicky took us off the gold standard. It was almost unheard of.
Deflation and inflation are monetary phenomena. Deflation is a collapse in the money supply. Inflation is a huge increase in the money supply.
The last major deflation the United States experienced was 1930-33. The US money supply declined by a full 30%. It wasn’t a good thing.
The Fed and other central bankers are currently trying to keep the series of collapsing asset bubbles from shrinking the money supply. It’s not much more complicated than that.
Mike Shedlock argues that the series of asset bubbles that the Fed is fighting was set into motion by bad Fed policy in the past. Which would have been Greenspan’s very low interest rate policy. Shedlock may well be right.