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To: fhayek

Productivity gains do cause deflation — when prices fall AND the monetary base is not expanded. And that is a good thing. See the Great Deflation of 1870-1890.

The problem comes when the monetary authority (a central bank or our Federal Reserve) steps in and says ALL deflation is bad, and therefore “a little inflation is good!” See the value of the US dollar since 1913 to see how that works out.


71 posted on 03/18/2020 4:10:32 PM PDT by kevao (BIBLICAL JESUS: Give your money to the poor. SOCIALIST JESUS: Give your neighbor's money to the poor)
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To: kevao

With all due respect, prices can rise and fall without there being inflation/deflation. The price of oil has dropped dramatically because of a demand/supply dynamic. No deflation. Inflation and deflation are monetary phenomenon. Don’t let anyone tell you differently.


72 posted on 03/18/2020 4:24:15 PM PDT by fhayek
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