Holy smokes, I've found a Soviet propagandist Freeper?!
While their people starved the bureaucrats struggled to meet Stalin's arbitrary (as they were not rooted in supply and demand) needs any way they could. The 5lbs nails that no one could use is just one example. For GDP counters like Krugman it might be perceived as wealth, but to society it was a drain.
100,000 tons of nails is a lot of wealth.
Not if you don't have any use for a 5lbs nail it isn't, it is a waste of all the resources and effort squandered creating them.
Did computer prices drop because of deflation or because of improvements in technology?
Doesn't matter, you said, "If you think production will increase if prices across the board are guaranteed to drop 3% a year, every year, you're confused.". People will invest when they perceive an imbalance of supply and demand sufficient to create a profit, whether prices are rising or dropping.
Has home building increased or decreased since prices have dropped?
Decreased, because of oversupply, yet even house building hasn't stopped. In fact, even in this environment people still see an opportunity to profit by investing in the creation of new housing units.
Will you buy a new house if you know the price will drop 3% a year, forever? Will the bank give you a mortgage?
Sure, I bought a house last February in fact, and I'll have it paid off in less than 7 years, after which time I'll still have a roof over my family's head (provided I keep up with ~$200/mo property taxes). The house has utility to me, and the bank providing the mortgage knew the price of the house wasn't dropping to zero because it has utility to others as well.
Where?
For GDP counters like Krugman it might be perceived as wealth, but to society it was a drain.
Because the wealth inputs were larger than the wealth outputs. Duh.
Not if you don't have any use for a 5lbs nail it isn't, it is a waste of all the resources and effort squandered creating them.
As I said, the ore wealth and coal wealth were larger than the nail wealth. Each of the three was wealth.
Doesn't matter, you said, "If you think production will increase if prices across the board are guaranteed to drop 3% a year, every year, you're confused.".
Absolutely matters.
Will Government Motors borrow money, build new plants and increase production if every car sells for 3% less next year. 3% less the next, 3% less the year after that?
Will people buy more cars or fewer, if they know the price will drop next year and the year after and the year after that?
Will their profitability increase or decrease in that scenario? Dividends increase or decrease? What about employee headcount? Employee salaries?