At least you're honest enough to admit this. Most deflation advocates think their buying power will increase because their salaries will remain unchanged.
When their salary drops, will the typical home owner still have to make the same mortgage payment? Same student loan payment? Will that reduce the amount available to spend on those cheaper goods out there?
no different really than how businesses have to try and factor for inflation now.
Totally different.
You want to sleep under the bridge? I plan to sleep in my house.
Where will the people who don't have a house yet sleep? Maybe they'll live in an apartment building? I'm sure there will be lots of them built, knowing their value will decline every year. No worries, the rent they can charge will decline as well. Maybe you should build a few?
Are you unaware that the savings rate has increased since the recession began?
When deflation and bank failures were occurring in the 1930s, did that help the savings rate? When your savings disappeared when your bank went under, could you buy more cheap goods, or less?
Households are trying to repair their balance sheets and provide a more sustainable foundation for economic growth
That is a great idea. It's easier when deflation isn't causing business failures and layoffs.
At least you're honest enough to admit this. Most deflation advocates think their buying power will increase because their salaries will remain unchanged.
Salaries will decline in nominal terms, but as the purchasing power of money increases, and productivity increases, the purchasing power of salaries will rise.
When their salary drops, will the typical home owner still have to make the same mortgage payment? Same student loan payment? Will that reduce the amount available to spend on those cheaper goods out there?
When the currency change comes anyone with contracts denominated in Federal Reserve notes is likely to seek an amended contract in the new dollar backed in gold. I would not expect the (nominal) terms to be the same. If they didn't, the borrower would simply be able to convert gold backed currency for the Federal Reserve's floating currency, and enjoy the same advantages of repaying a loan in a constantly inflated currency.
no different really than how businesses have to try and factor for inflation now.
Totally different.
No, not really. Anyone lending money on 30 years terms today has to factor for how inflation will effect the purchasing power of the repayment over time. Lending in an environment of nominally deflating prices will requires the same consideration to made about the purchasing power of the repayment over the course of the loan.
Where will the people who don't have a house yet sleep? Maybe they'll live in an apartment building? I'm sure there will be lots of them built, knowing their value will decline every year.
Again, in nominal terms, not purchasing power terms. We've found the crux of your confusion and angst in this matter. Maybe it would help to look at this from the other direction. In 1964, when a quarter still contained silver, a gallon of gas cost 30 cents. Did you know that silver quarter would buy you more than a gallon of gas today (it's worth ~$5.82 in Federal Reserve notes)? Productivity increases in oil extraction, refining, and transportation have lowered the price of gasoline in real terms, but that reality has been swamped by inflation of the fiat money supply.
No worries, the rent they can charge will decline as well. Maybe you should build a few?
You repeatedly conflate and confuse nominal price changes with purchasing power changes. Supply and demand will determine how many housing units to build, and what to charge for them. Owners will invest in them (production and maintenance) so long as the free market price signals a profit available in doing so.
When deflation and bank failures were occurring in the 1930s, did that help the savings rate?
Yes! The savings rate went up after the bank failures that heralded FDR's presidency. The bank failures were the recognition that savings had been squandered in the boom, and people had to increase savings rates to rebuild their savings.
When your savings disappeared when your bank went under, could you buy more cheap goods, or less?
The bust under a fiat money, fractional reserve system is always going to bring pain to the future, when society is forced to bear the full price of the boom it previously enjoyed. You err in conflating the deflation (shrinking) of the money supply under a boom/bust fiat money, fractional reserve system with the shrinking of prices under a hard money regime that is merely consequent to increases in productivity (not central bank malfeasance with the interest rates in the credit market).
That is a great idea. It's easier when deflation isn't causing business failures and layoffs.
Deflation under a fiat money regime is the collapse of credit when the debt burden assumed under the easy money boom is recognized as unpayable. In such a situation there are indeed business failures and layoffs as the economy must be re-aligned to the underlying realities of supply and demand that easy money masked (temporarily). This boom/bust scenario is not analogous to the 'deflation' of prices that occurs under a hard money regime where the profusion of goods outpaces the growth of the monetary base and supply and demand reduces prices in nominal terms.
If the Federal Reserve doubled the money supply tomorrow and handed the cash out equally to the population, do you think this would constitute an increase in 'savings' (having changed the nominal amount of everyone's cash balances)? Would any more saved goods exist for future consumption that didn't the day before?