Pass the deflation parcel

[SpontaneousOrder]

I don't buy into the deflation bogey man at all. Deflation should be the natural order of things, and is a good thing - [nearly] everything should be getting cheaper all the time as we get more and more efficient in producing goods & services.

Here's a decent summary: What

[ChimpMaster]

I don't buy into the deflation bogey man at all. Deflation should be the natural order of things, and is a good thing - [nearly] everything should be getting cheaper all the time as we get more and more efficient in producing goods & services.

Here's a decent summary: What

You can start with Sharia compliant finance and work your way down then.

[KentPhilip]

I don't see what is the problem with deflation. I mean can't a central bank just print lots of money, and prevent it?

[suityou01]

I don't see what is the problem with deflation. I mean can't a central bank just print lots of money, and prevent it?

Sadly this is how people now think.

[KentPhilip]

Sadly this is how people now think.

Fair point.
Perhaps you'd be kind enough to explain why money printing would not prevent deflation?

[suityou01]

Fair point.
Perhaps you'd be kind enough to explain why money printing would not prevent deflation?

No need to get all pissy.
Printing money is like giving a heroin addict a fix. Cures the problem until the next time.

[SpontaneousOrder]

I don't see what is the problem with deflation. I mean can't a central bank just print lots of money, and prevent it?

Why do you want to prevent it?

[Zero Liability]

You can start with Sharia compliant finance and work your way down then.

Well the current paradigm of pushing interest rates down to near zero has more in common with that, than not falsifying them.

It's true that price falls arising from higher productivity tend to be conflated with monetary deflation (for the same reason that the converse phenomena are), which they ought not to be, however monetary deflation tends to be the follow-up of artificial credit expansion, so it's not clear to me why it should be prevented.

That said, just printing loads of money won't do so, you can do that to the point that interest rates go so low that it just won't work anymore. Thus the central banksters are forced to rely upon more 'creative' measures now.

[SpontaneousOrder]

however monetary deflation tends to be the follow-up of artificial credit expansion

I.e. inflationary credit gone bad.
*if* we didn't rely on continual new money creating credit, then there would be no transient 'credit money' supply to evaporate resulting in money supply shrinkage, thus no monetary deflation. Only price deflation.

I think that makes sense. It's late.

[KentPhilip]

Why do you want to prevent it?

I'm not saying I would want to prevent deflation, I was just interested in whether the mechanism of printing money would be effective at preventing deflation.
It looks like the answer from Suity is that yes it would, but would make future deflation more likely (requiring the same thing to be done again) and have certain negative effects on the economy.