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To: blam
“For most economists and commentators, a general fall in prices, which they label deflation, is a terrible thing”

This guy is an idiot. Nobody who knows anything about the economy thinks falling prices is a bad thing. Falling prices are usually the result of productivity increases or technical innovations. This is good for everyone.

What people call deflation is usually good in itself but is a symptom of severe economic collapse. Too few dollars are available to buy the goods that are available. Nobody has any money so the price of things goes down. This is usually the result of some disruption or impediment to to the economy or the confiscation of money from those who earn it. This deflation is a symptom of economic collapse. Everyone loses their job so no one can afford to buy things. Demand goes down and so does price. Lack of demand makes production unprofitable so the cycle continues.

17 posted on 08/12/2010 10:19:17 AM PDT by detective
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To: detective

You are conflating two different things. When the price of a particular commodity drops because of increasing supplies that of course is a wonderful thing. That is not the same a deflation which is a GENERAL drop in the price of things across the economy. That is evidence that something very bad is going on in the economy.


22 posted on 08/12/2010 10:28:28 AM PDT by DManA
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