When your mortgage is in a gold backed currency and your salary in gold decreases 3% a year, does that reduce your spending power?
At a minimum the rate of expected deflation will be subtracted from the interest rate
How do you do that with mortgages already out there? And isn't the lender going to be concerned with the deflating value of your collateral?
You're very hung up on nominal numbers, and seem unable to grasp the concept of purchasing power.
You're unable to grasp the historical damage to debtors a grinding deflation can be.
I noticed you glossed over the part I mentioned about the 1962 quarter.
Since it had nothing to do with deflation, it was pointless.
Those savings were squandered in the preceding boom when the interest rate intervention spawned malinvestment of capital (your savings at the bank).
Even banks with no bad loans and sufficient capital failed during bank runs.
Yes, there were booms and busts, and we can go over how the governments intervention in credit markets created them if you want to discuss specific episodes.
Even under a gold standard? Shocking!
The key is to understand that there can be excesses of fractional reserve credit under a gold standard
What? Impossible! LOL!
Furthermore, look a the growth of government debt since we embarked on the Federal Reserve system
Look at the higher government debt under the gold standard.
Only by however much you agreed to reduce your spending power when you took out the contract to buy the house. You're getting a home in return for your payments. If I bought another car tomorrow I'd be reducing my spending power by whatever amount I agreed to devote to future car payments.
How do you do that with mortgages already out there? And isn't the lender going to be concerned with the deflating value of your collateral?
Existing contracts could continue to be paid in Federal Reserve notes if the parties didn't agree to new terms. New terms would be no more difficult to establish than any other re-financing. The draw down in principal owned would address the lenders concerns about the nominal value of the home. The word you're looking for is amortization.
You're unable to grasp the historical damage to debtors a grinding deflation can be.
The 'damage' borne by borrowers by lower prices (which is what you mean by 'deflation' in this context) is simply that by satisfying urgency they bear a higher cost than someone who first saved for something and then purchased it. If you 'can't wait' to have a new TV, then yes, you pay more than the person who waits, saves for it, and then purchases the TV. You prefer to punish those who would save with lower purchasing power and ameliorate the natural cost of time preference on those who would borrow by allowing them to repay in devalued currency.
Since it had nothing to do with deflation, it was pointless
You may as well scream in all caps that you don't get it as make a comment like that. I directly addressed your concerns about lower nominal repayment with an example of why purchasing power, not nominal valuation in floating currency, is what matters.
On the other hand you still ignore my question: 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 the future consumption that didn't the day before?
Even banks with no bad loans and sufficient capital failed during bank runs.
If the bank failed to be able to make good demand deposits they cannot be declared to have had sufficient capital.
Look at the higher government debt under the gold standard.
When, and by what metric?