Friday, February 8, 2013

Deflation is Our Friend

Falling prices is always a good thing, as in deflation...  here is an excellent article on the topic...


Contrary to the popular view, price deflation as a rule is always good news for the economy. When prices are falling in response to the expansion of real wealth, this means that people’s living standards are rising. When prices are falling as a result of the burst of the financial bubble, it is also good news for the economy, for it indicates that the impoverishment of wealth producers was arrested. The latest proposed Japanese policy to raise the pace of the monetary pumping in order to counter deflation amounts to furthering the economic impoverishment of wealth producers, thereby delaying any meaningful economic recovery from taking place.


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