Topic: Inflation supports economic growth. Prove otherwise in this thread! - page 6. (Read 4508 times)

The Slate article is interesting but doesn't say anything about the future. What happens when one of those giant banks that's holding all that fiat gets in trouble again and starts using it?

This is good. Don't get scared away by the nuts like me. Keep posting!

 Come on man.  We're not going to write your economics thesis for you for free...

http://www.slate.com/blogs/moneybox/2012/08/03/the_monetary_base_is_irrelevant.html

Inflation is good for borrow's since you pay the money back with dollars that are not worth as much and it hurts people with savings. Deflation is good for creditors and people with savings as their dollars are worth more tomorrow than they are worth today.

Some small inflation can be good, but when you look at how acutely the monetary base has skyrocketed, this is a problem.

http://www.geekcipher.com/technology/bitcoin-vs-us-dollar-in-retaining-value/

^^First graph on that page

Cash-induced inflation disrupts the production structure and redistributes wealth so that capital flows into enterprises that would otherwise be unsustainable without said inflation. When these enterprises begin to take advantage of inflation, which usually comes in the form of direct subsidies or cheap credit, they expand exponentially. They go regional, national, international, and all the while they are hiring more people. When the cheap money stops flowing, those inflation-dependent enterprises will of course collapse, and all of the people working for those enterprises will be out of a job. In addition to disrupting the production structure, inflation stimulates demand and thereby increases prices. So, when the credit-addicted businesses fail and all their employees are out of a job, demand suddenly decreases because they can't afford to buy anything. As a result, prices must drop for the remaining enterprises to stay in business.

As for deflation, it can be both good or bad. It is good when the purchasing power of money is increasing because prices are going down as a result of innovation and competition. But it is harmful when it is caused by a drop in aggregate demand-- which is generally brought about because of the unemployment caused by central banks' inflationary policies-- or when a central bank/government deliberately contracts the supply of money so that the demand for money is higher than the available stock of money.

I have been always taught that slight inflation is good. I saw people pointing out 100 year graph of USD always having slight inflation. It makes sense, it makes a little urge for people to spend.
But I believe that also deflationary system can work. People will still buy things they need, although not as much.. Causing joblessness etc 

If possible to, can you please somehow prove that deflationary financial system can be sustainable aswell?