Why Falling Prices Are Actually a Really Bad Thing

Re:Why Falling Prices Are Actually a Really Bad Thing by marcosdumay on Thursday January 22, 2015 @09:32AM (#8929269)

The usual example of a deflation spiral is the 29's crisis. Altough it's not helped by the fact that most developed countries got into a crisis by about the same time, with several kinds of monetary policies, from US deflation to Germany iperinflation, with everything in the middle.

The only point of the article that makes any sense is #5. The author does even ignore the keynesian theory of sticky salaries pricing people out of the labor market (however true it is). It's an almost thought-free article.

[ Parent | on HN ]

Re:Why Falling Prices Are Actually a Really Bad Thing by brc on Thursday January 22, 2015 @05:46PM (#8932281)

I don't agree that a reduction in growth (recession or depression) is a deflationary spiral. Yes, there was deflation, but it didn't go into an uncontrolled tailspin.

The problem was the old canard of irrational exuberance and excessive bad debt. Which must be cleared by letting bad choices come home and businesses go broke so that resources can be reallocated. The measures to 'fight' it, like confiscating and refining the price of gold, and other measures, most likely prolonged it.

[ Parent | on HN ]