So the Soviet Union must have been producing massive amounts of wealth under the five year plans, eh?
Who cares if anyone actually wants a 5lbs nail, Stalin says make 100,000 tons of nails, and this is the quickest way...
Production in and of itself doesn't guarantee wealth because there is no guarantee people want what you're producing. If they don't, you're actually destroying wealth by committing resources to less desired uses.
Inflation punishes saves, and thereby encourages higher consumption, which reduces wealth (which is simply desired, but unconsumed, production).
If you think production will increase if prices across the board are guaranteed to drop 3% a year, every year, you're confused.
Computer prices dropped faster than that, yet production, contrary to your understanding, increased every year. It seems the world as it stands doesn't fit your understanding. Check your premises.
They were.
Who cares if anyone actually wants a 5lbs nail, Stalin says make 100,000 tons of nails, and this is the quickest way...
100,000 tons of nails is a lot of wealth.
Production in and of itself doesn't guarantee wealth because there is no guarantee people want what you're producing. If they don't, you're actually destroying wealth by committing resources to less desired uses.
I understand your confusion now. 100,000 tons of nails is a lot of wealth, but Stalin should have sold the iron and coal he wasted to make the nails instead. He could have used the proceeds to buy 200,000 tons of nails.
In his case, the coal and iron ore represented more wealth than the nails he produced. Production. Of ore and coal.
Computer prices dropped faster than that, yet production, contrary to your understanding, increased every year.
Did computer prices drop because of deflation or because of improvements in technology?
You should check your premises.
Has home building increased or decreased since prices have dropped?
Will you buy a new house if you know the price will drop 3% a year, forever? Will the bank give you a mortgage?