Re:Better technology means higher expectations, which create...
by eru on Wednesday January 15, 2020 @02:27AM
(#22052328)
That's a common misconception.
What's not nice is collapsing total spending (equal to collapsing nominal GDP). In practice, a collapse in total spending often comes with a depression of the price level.
As long as nominal GDP is stable (or alternatively, total nominal wages), prices can drop all they want. We see that eg in the computer sector. Total spending on computers increases, while prices drop thanks to better technology and greater productivity.
What's not nice is collapsing total spending (equal to collapsing nominal GDP). In practice, a collapse in total spending often comes with a depression of the price level.
As long as nominal GDP is stable (or alternatively, total nominal wages), prices can drop all they want. We see that eg in the computer sector. Total spending on computers increases, while prices drop thanks to better technology and greater productivity.
See eg https://mises.org/library/less-zero-case-falling-price-level... for some more background.