Table of content

• “But The Experts™ think that price deflation is bad!”
• The inflation and deflation terms have been revised by the Keynesian revolution to sow confusion
• “Price Inflation” vs “Price Deflation” corresponds to “Impoverishment” vs “Enrichment”, by definition
• Why price deflation is just unambigiously good; 1$ for 1 year’s worth of food as an implication of high durable non-price-fixing price deflation caused by increased efficiency in production and in distribution / elaborations on “abundance-induced price deflation”
  • “But how can 1$ for 1 year’s worth of food be a viable business model?”-litmus test of whether someone has understood the implications of natural price deflation
    • The realistic intermediary reference point of price deflation: imagine that one’s cost of living had been reduced by a factor of ten thanks to increased efficiency in production and in distribution
  • Price deflation is a preferable metric to how an economy is going than GDP
  • The 2% price inflation goal is consequently unambigiously undesirable. 2% price inflation is just impoverishment.
    • “But people are not impoverished if their wages rise in compensation for the 2% price inflation”
    • “But GDP may increase even if inflation increases”
• The mechanics of a firm partaking in price deflation; how one can derive profits in a price deflation environment
  • Worth remembering that some firms may choose to absorb the demand in a market and then liquidate
• The good counter argument against price deflation goal-setting. Maybe ‘productivity’ is a better metric
• The lies regarding price deflation
  • “But without inflation, people would stop consuming”, or Price deflation does not cause recessions; correlation does not equal causation
  • These instances are frequently pointed to when arguing that price deflation is bad. Remark: as described in the previous article, all of these instances of (supposed) price deflation happened after severe economic shocks – they were rather instances of decreased consumer confidence. There are differences between economic shock-induced price deflation and abundance-induced price deflation. The latter one is the one I praise here, and which all should wish for.
    • ‘But the Great Depression was preceded by price deflation!’ This is a patently false statement
    • “Muh Japan long duration of price deflation during the so-called ‘Lost Decades'”
    • 2008 FED-induced economic crisis was clearly not an example of an abundance-induced price deflation spiral. It’s self-evident that it wasn’t caused by people just suddendly stopping to consume in anticipation of more cheap stuff.
  • These two come as a result of people don’t understanding the meaning of “ceteris paribus”. Price inflation/deflation merely set the general price level in the economy – it doesn’t inherently have to lead to the latter two changing as a consequence.
    • “Price deflation will lead to reductions of salaries!”
    • “Price deflation disadvantages debtors; price inflation advantages debtors”