Deflation - Revision history

Pestergaines: /* Links */ +res

2013-06-26T19:00:13Z

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	** [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011		** [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011
	** {{md\|6362\|The Deflationary Spiral Bogey\|[[Robert Blumen]]\|February 2013}}		** {{md\|6362\|The Deflationary Spiral Bogey\|[[Robert Blumen]]\|February 2013}}
			** {{md\|6459\|What’s So Scary About Deflation?\|Frank Hollenbeck\|June 2013}}
	** {{wplink}}		** {{wplink}}

John James: /* Links */ added

2013-04-01T08:06:37Z

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	==Links==		==Links==
	* [[~~Wikipedia:Deflation\|Deflation~~]] ~~on Wikipedia~~		* Articles and essays
	* [http://~~www~~.~~youtube.com~~/~~watch?v=U9w0S9bEXIw Economics of Deflation~~] ~~(video~~) ~~by Hülsmann~~		** An Austrian Taxonomy of Deflation ([http://mises.org/journals/scholar/salerno.pdf PDF]) by [[Joseph T. Salerno]], February 2002 <small>(abridged version as Mises Daily [http://mises.org/daily/890 here])</small>
	* [http://mises.org/journals/~~scholar~~/~~salerno~~.pdf ~~An Austrian Taxonomy of Deflation~~] ~~(pdf~~) ~~by Joseph T. Salerno, February 2002~~		*** An Austrian Taxonomy of Deflation—With Applications to the U.S. ([http://mises.org/journals/qjae/pdf/qjae6_4_8.pdf PDF])
	* [http://mises.org/daily/1040 The Imaginary Evils of Deflation] by Christopher Mayer, September 2002		** [http://mises.org/daily/1040 The Imaginary Evils of Deflation] by Christopher Mayer, September 2002
	* [http://mises.org/journals/qjae/pdf/qjae6_4_2.pdf ~~Apoplithorismosphobia~~] ~~(pdf~~) by Mark Thornton, 2003, on the "fear of deflation"		** "Apoplithorismosphobia" ([http://mises.org/journals/qjae/pdf/qjae6_4_2.pdf PDF]) by [[Mark Thornton]], 2003, on the "fear of deflation"
	* [http://mises.org/journals/qjae/pdf/qjae6_4_9.pdf ~~Deflation Teaser? Klondike Bars and the Golden 90s in Canada~~] ~~(pdf~~) by Mark Thornton, 2003		** Deflation Teaser? Klondike Bars and the Golden 90s in Canada ([http://mises.org/journals/qjae/pdf/qjae6_4_9.pdf PDF]) by Mark Thornton, 2003
	* [http://mises.org/daily/1583 Deflation and Depression: Where's the Link?] by Joseph T. Salerno, August 2004		** [http://mises.org/daily/1583 Deflation and Depression: Where's the Link?] by Joseph T. Salerno, August 2004
	* [http://mises.org/journals/qjae/pdf/qjae8_1_2.pdf ~~Deflation and Japan Revisited~~] ~~(pdf~~) by Richard C.B. Johnsson, 2005		** Deflation and Japan Revisited ([http://mises.org/journals/qjae/pdf/qjae8_1_2.pdf PDF]) by Richard C.B. Johnsson, 2005
	* [http://mises.org/daily/3249 Deflation: Nothing to Fear], December 2008, by Jeff Bonn		** [http://mises.org/daily/3249 Deflation: Nothing to Fear], December 2008, by Jeff Bonn
	* [http://mises.org/daily/3296 Falling Prices Are the Antidote to Deflation] by George Reisman, January 2009		** [http://mises.org/daily/3296 Falling Prices Are the Antidote to Deflation] by [[George Reisman]], January 2009
	* [http://mises.org/daily/4623 In Defense of Deflation] by Doug French, August 2010		** [http://mises.org/daily/4623 In Defense of Deflation] by [[Doug French]], August 2010
	* [http://mises.org/daily/4602 Murray Rothbard and the Deflation Bogey] by William L. Anderson, August 2010		** [http://mises.org/daily/4602 Murray Rothbard and the Deflation Bogey] by [[William L. Anderson]], August 2010
	* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010		** {{md\|3810\|Does a Fall in Credit Lead to Deflation?\|[[Frank Shostak]]\|October 2009}}
	* [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011		** [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010
	* {{md\|6362\|The Deflationary Spiral Bogey\|Robert Blumen\|February 2013}}		** [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011
			** {{md\|6362\|The Deflationary Spiral Bogey\|[[Robert Blumen]]\|February 2013}}
			** {{wplink}}

			* Other media
			** [http://www.youtube.com/watch?v=U9w0S9bEXIw Economics of Deflation] (video) by [[Jörg Guido Hülsmann]]

	[[Category:Money]]		[[Category:Money]]

Pestergaines: +links, +res

2013-02-19T10:20:34Z

+links, +res

← Older revision		Revision as of 10:20, 19 February 2013
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	{{RightTOC}}		{{RightTOC}}
	'''Deflation''' is a contraction in the supply of [[money]],<ref name="Rothbard_deflation">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap12f.asp#11C._Secondary_Developments "C. Secondary Developments of the Business Cycle"], [[Man, Economy and State]], referenced 2010-03-09.</ref> and, as such, is the opposite of [[inflation]]. A decline in the price level is known as '''price deflation''', but outside the [[Austrian School of Economics]], this distinction is rarely made and the term ''deflation'' often refers to falling prices.		'''Deflation''' is a contraction in the supply of [[money]],<ref name="Rothbard_deflation">[[Murray N. Rothbard]]. [http://mises.org/rothbard/mes/chap12f.asp#11C._Secondary_Developments "C. Secondary Developments of the Business Cycle"], [[Man, Economy and State]], referenced 2010-03-09.</ref> and, as such, is the opposite of [[inflation]]. A decline in the [[price]] level is known as '''price deflation''', but outside the [[Austrian School of Economics]], this distinction is rarely made and the term ''deflation'' often refers to falling prices.

	==Price deflation==		==Price deflation==
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	[[Murray Rothbard]] refutes three common arguments: First, that falling prices would depress business. Second, a deflation induced increase in real debt would hamper production. Third, credit contraction would worsen and aggravate the depression. He stresses that the anticipation of falling prices "lead to an immediate fall in factor prices," since entrepreneurs would simply bid down the prices of the factors of production to the anticipated levels. "What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the "natural rate of interest"). If wage rates, for example, fall more rapidly than product prices, this stimulates business activity and employment."<ref name="Rothbard_depression">Murray N. Rothbard. [http://mises.org/rothbard/agd.pdf "America's Great Depression"], The Positive Theory of the Cycle, p. 17, referenced 2010-03-16.</ref> He points out, that a credit contraction in a depression will have the beneficial effect of speeding up the adjustment process, since it returns the economy to free-market proportions much sooner than otherwise. Also, in a depression some of the [[Malinvestment\|wrong investment]] projects have to be liquidated, because there are not enough savings available to sustain them. A credit contraction induces an increase in savings, so fewer adjustments are necessary. While stating that deflation could at least potentially play a role in a monetary reform, he finally decides against it.<ref name="Bagus_deflation" />		[[Murray Rothbard]] refutes three common arguments: First, that falling prices would depress business. Second, a deflation induced increase in real debt would hamper production. Third, credit contraction would worsen and aggravate the depression. He stresses that the anticipation of falling prices "lead to an immediate fall in factor prices," since entrepreneurs would simply bid down the prices of the factors of production to the anticipated levels. "What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the "natural rate of interest"). If wage rates, for example, fall more rapidly than product prices, this stimulates business activity and employment."<ref name="Rothbard_depression">Murray N. Rothbard. [http://mises.org/rothbard/agd.pdf "America's Great Depression"], The Positive Theory of the Cycle, p. 17, referenced 2010-03-16.</ref> He points out, that a credit contraction in a depression will have the beneficial effect of speeding up the adjustment process, since it returns the economy to free-market proportions much sooner than otherwise. Also, in a depression some of the [[Malinvestment\|wrong investment]] projects have to be liquidated, because there are not enough savings available to sustain them. A credit contraction induces an increase in savings, so fewer adjustments are necessary. While stating that deflation could at least potentially play a role in a monetary reform, he finally decides against it.<ref name="Bagus_deflation" />

	Jörg Guido Hülsmann points out that the quantity of money is irrelevant. Any quantity of money provides all the services that indirect exchange can possibly provide, both in the long run and in the short run. A change in the [[money supply]] - inflation or deflation - does not affect the aggregate wealth of society. Our tools, our machines, the streets, the cars and trucks, our crops and our food supplies — all this is still in place — but both phenomena radically modify the structure of ownership. The consequence of a century of [[inflation]] were financial crises, dominance of banks and firms financed by credit over the economy, and massively increased debt on all levels.		[[Jörg Guido Hülsmann]] points out that the quantity of money is irrelevant. Any quantity of money provides all the services that indirect exchange can possibly provide, both in the long run and in the short run. A change in the [[money supply]] - inflation or deflation - does not affect the aggregate wealth of society. Our tools, our machines, the streets, the cars and trucks, our crops and our food supplies — all this is still in place — but both phenomena radically modify the structure of ownership. The consequence of a century of [[inflation]] were financial crises, dominance of banks and firms financed by credit over the economy, and massively increased debt on all levels.

	As a consequence of deflation, firms financed by credit go bankrupt because at the lower level of prices they can no longer pay back the credit they had incurred without anticipating the deflation. Private households with mortgages and other considerable debts to pay back go bankrupt, because with the decline of money prices their monetary income declines too, whereas their debts remain at the nominal level. Other people will run the firms and own the houses — people who at the time the deflation set in were out of debt and had cash in hand to buy firms and real estate. These new owners can run the firms profitably at the much lower level of selling prices because they bought the stock, and will buy other factors of production, at lower prices too.		As a consequence of deflation, firms financed by credit go bankrupt because at the lower level of prices they can no longer pay back the credit they had incurred without anticipating the deflation. Private households with mortgages and other considerable debts to pay back go bankrupt, because with the decline of money prices their monetary income declines too, whereas their debts remain at the nominal level. Other people will run the firms and own the houses — people who at the time the deflation set in were out of debt and had cash in hand to buy firms and real estate. These new owners can run the firms profitably at the much lower level of selling prices because they bought the stock, and will buy other factors of production, at lower prices too.
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	* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010		* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010
	* [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011		* [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011
			* {{md\|6362\|The Deflationary Spiral Bogey\|Robert Blumen\|February 2013}}

	[[Category:Money]]		[[Category:Money]]

Forgottenman: reworking this

2011-08-30T15:02:40Z

reworking this

Show changes

Pestergaines: /* Links */ +res

2011-06-22T14:27:00Z

Links: +res

← Older revision		Revision as of 14:27, 22 June 2011
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	* [http://mises.org/journals/scholar/salerno.pdf An Austrian Taxonomy of Deflation] (pdf) by Joseph T. Salerno, February 2002		* [http://mises.org/journals/scholar/salerno.pdf An Austrian Taxonomy of Deflation] (pdf) by Joseph T. Salerno, February 2002
	* [http://mises.org/daily/1040 The Imaginary Evils of Deflation] by Christopher Mayer, September 2002		* [http://mises.org/daily/1040 The Imaginary Evils of Deflation] by Christopher Mayer, September 2002
			* [http://mises.org/journals/qjae/pdf/qjae6_4_2.pdf Apoplithorismosphobia] (pdf) by Mark Thornton, 2003, on the "fear of deflation"
	* [http://mises.org/journals/qjae/pdf/qjae6_4_9.pdf Deflation Teaser? Klondike Bars and the Golden 90s in Canada] (pdf) by Mark Thornton, 2003		* [http://mises.org/journals/qjae/pdf/qjae6_4_9.pdf Deflation Teaser? Klondike Bars and the Golden 90s in Canada] (pdf) by Mark Thornton, 2003
	* [http://mises.org/daily/1583 Deflation and Depression: Where's the Link?] by Joseph T. Salerno, August 2004		* [http://mises.org/daily/1583 Deflation and Depression: Where's the Link?] by Joseph T. Salerno, August 2004

Pesterbot: /* Links */External Links to Links, replaced: ==External links== → ==Links==

2011-06-21T18:39:06Z

Links: External Links to Links, replaced: ==External links== → ==Links==

← Older revision		Revision as of 18:39, 21 June 2011
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	{{Reflist}}		{{Reflist}}

	==~~External links~~==		==Links==
	* [[Wikipedia:Deflation\|Deflation]] on Wikipedia		* [[Wikipedia:Deflation\|Deflation]] on Wikipedia
	* [http://mises.org/journals/scholar/salerno.pdf An Austrian Taxonomy of Deflation] (pdf) by Joseph T. Salerno, February 2002		* [http://mises.org/journals/scholar/salerno.pdf An Austrian Taxonomy of Deflation] (pdf) by Joseph T. Salerno, February 2002

Pestergaines: Example of deflation in computer industry.

2011-03-09T23:26:27Z

Example of deflation in computer industry.

← Older revision		Revision as of 23:26, 9 March 2011
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	'''Falling prices''' have been recorded in the computer industry and appliances, which have gone down in price dramatically over the years even as sales have risen higher and higher. Why? Because the companies have gotten better and better at doing what they do, and have been able to make profits even in the face of continual price declines.<ref name="Rockwell_deflation">Llewellyn H. Rockwell, Jr. [http://mises.org/freemarket_detail.aspx?control=451 "Deflation: Hurrah!"], The Free Market Volume 23, Number 8, August 2003. Referenced 2010-03-09.</ref>		'''Falling prices''' have been recorded in the computer industry and appliances, which have gone down in price dramatically over the years even as sales have risen higher and higher. Why? Because the companies have gotten better and better at doing what they do, and have been able to make profits even in the face of continual price declines.<ref name="Rockwell_deflation">Llewellyn H. Rockwell, Jr. [http://mises.org/freemarket_detail.aspx?control=451 "Deflation: Hurrah!"], The Free Market Volume 23, Number 8, August 2003. Referenced 2010-03-09.</ref>

			::{\| border="1" cellspacing="0" cellpadding="5" style="text-align:center"
			! Year
			! Price of a Gigabyte of digital disk storage:<ref name="HDD_Cost">[http://ns1758.ca/winch/winchest.html "Cost of Hard Drive Storage Space"], as summarized in [http://isen.com/blog/2011/03/the-decline-and-fall-of-disk-storage-prices/ "The decline and fall of disk storage prices"] by David S. Isenberg, March 7, 2011. Referenced 2011-03-10.</ref>
			\|-
			\|1981
			\|$300,000
			\|-
			\|1987
			\|$50,000
			\|-
			\|1990
			\|$10,000
			\|-
			\|1994
			\|$1000
			\|-
			\|1997
			\|$100
			\|-
			\|2000
			\|$10
			\|-
			\|2004
			\|$1
			\|-
			\|2010
			\|$0.10
			\|}

	==Deflation and falling credit==		==Deflation and falling credit==

Pestergaines: /* External links */ Resource added.

2011-01-25T10:12:07Z

External links: Resource added.

← Older revision		Revision as of 10:12, 25 January 2011
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	* [http://mises.org/daily/4602 Murray Rothbard and the Deflation Bogey] by William L. Anderson, August 2010		* [http://mises.org/daily/4602 Murray Rothbard and the Deflation Bogey] by William L. Anderson, August 2010
	* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010		* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010
			* [http://mises.org/daily/4974 The Politics of Deflation] by Vijay Boyapati, January 2011

	[[Category:Money]]		[[Category:Money]]

Forgottenman: I think this goes in Category:Money

2010-11-18T17:44:09Z

I think this goes in Category:Money

← Older revision		Revision as of 17:44, 18 November 2010
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	* [http://mises.org/daily/4602 Murray Rothbard and the Deflation Bogey] by William L. Anderson, August 2010		* [http://mises.org/daily/4602 Murray Rothbard and the Deflation Bogey] by William L. Anderson, August 2010
	* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010		* [http://mises.org/daily/4618 Is Deflation Really Bad for the Economy?] by Frank Shostak, August 2010
	[[Category:~~Economic concepts~~]]
			[[Category:Money]]

184.9.89.42: /* Opinions on Deflation */ punctuation

2010-11-12T00:34:51Z

Opinions on Deflation: punctuation

← Older revision		Revision as of 00:34, 12 November 2010
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	'''[[Murray Rothbard\|Rothbard]]''' refutes three common arguments: First, that falling prices would depress business. Second, a deflation induced increase in real debt would hamper production. Third, credit contraction would worsen and aggravate the depression. He stresses that the anticipation of falling prices "lead to an immediate fall in factor prices," since entrepreneurs would simply bid down the prices of the factors of production to the anticipated levels. "What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the "natural rate of interest"). If wage rates, for example, fall more rapidly than product prices, this stimulates business activity and employment."<ref name="Rothbard_depression">Murray N. Rothbard. [http://mises.org/rothbard/agd.pdf "America's Great Depression"], The Positive Theory of the Cycle, p. 17, referenced 2010-03-16.</ref> He points out, that a credit contraction in a depression will have the beneficial effect of speeding up the adjustment process, since it returns the economy to free-market proportions much sooner than otherwise. Also, in a depression some of the [[Malinvestment\|wrong investment]] projects have to be liquidated, because there are not enough savings available to sustain them. A credit contraction induces an increase in savings, so fewer adjustments are necessary. While stating that deflation could at least potentially play a role in a monetary reform, he finally decides against it.<ref name="Bagus_deflation" />		'''[[Murray Rothbard\|Rothbard]]''' refutes three common arguments: First, that falling prices would depress business. Second, a deflation induced increase in real debt would hamper production. Third, credit contraction would worsen and aggravate the depression. He stresses that the anticipation of falling prices "lead to an immediate fall in factor prices," since entrepreneurs would simply bid down the prices of the factors of production to the anticipated levels. "What matters for business is not the general behavior of prices, but the price differentials between selling prices and costs (the "natural rate of interest"). If wage rates, for example, fall more rapidly than product prices, this stimulates business activity and employment."<ref name="Rothbard_depression">Murray N. Rothbard. [http://mises.org/rothbard/agd.pdf "America's Great Depression"], The Positive Theory of the Cycle, p. 17, referenced 2010-03-16.</ref> He points out, that a credit contraction in a depression will have the beneficial effect of speeding up the adjustment process, since it returns the economy to free-market proportions much sooner than otherwise. Also, in a depression some of the [[Malinvestment\|wrong investment]] projects have to be liquidated, because there are not enough savings available to sustain them. A credit contraction induces an increase in savings, so fewer adjustments are necessary. While stating that deflation could at least potentially play a role in a monetary reform, he finally decides against it.<ref name="Bagus_deflation" />

	'''Hülsmann''' points out, that the quantity of money is irrelevant. Any quantity of money provides all the services that indirect exchange can possibly provide, both in the long run and in the short run. A change in the [[money supply]] - inflation or deflation - does not affect the aggregate wealth of society. Our tools, our machines, the streets, the cars and trucks, our crops and our food supplies — all this is still in place~~. But,~~ both phenomena radically modify the structure of ownership. The consequence of a century of [[inflation]] were financial crises, dominance of banks and firms financed by credit over the economy, and a massively increased debt on all levels.		'''Hülsmann''' points out that the quantity of money is irrelevant. Any quantity of money provides all the services that indirect exchange can possibly provide, both in the long run and in the short run. A change in the [[money supply]] - inflation or deflation - does not affect the aggregate wealth of society. Our tools, our machines, the streets, the cars and trucks, our crops and our food supplies — all this is still in place — but both phenomena radically modify the structure of ownership. The consequence of a century of [[inflation]] were financial crises, dominance of banks and firms financed by credit over the economy, and massively increased debt on all levels.

	As a consequence of deflation, firms financed by credit go bankrupt because at the lower level of prices they can no longer pay back the credit they had incurred without anticipating the deflation. Private households with mortgages and other considerable debts to pay back go bankrupt, because with the decline of money prices their monetary income declines, too, whereas their debts remain at the nominal level. Other people will run the firms and own the houses — people who at the time the deflation set in were out of debt and had cash in hand to buy firms and real estate. These new owners can run the firms profitably at the much lower level of selling prices because they bought the stock, and will buy other factors of production, at lower prices too.		As a consequence of deflation, firms financed by credit go bankrupt because at the lower level of prices they can no longer pay back the credit they had incurred without anticipating the deflation. Private households with mortgages and other considerable debts to pay back go bankrupt, because with the decline of money prices their monetary income declines too, whereas their debts remain at the nominal level. Other people will run the firms and own the houses — people who at the time the deflation set in were out of debt and had cash in hand to buy firms and real estate. These new owners can run the firms profitably at the much lower level of selling prices because they bought the stock, and will buy other factors of production, at lower prices too.

	The true problem with deflation is that it does not hide the redistribution connected to changes in the quantity of money. It entails visible misery for many people, to the benefit of equally visible winners. This starkly contrasts with inflation, which creates anonymous winners at the expense of anonymous losers. Both deflation and inflation are, from this point of view, zero-sum games. But inflation is a secret rip-off, whereas deflation means open redistribution through bankruptcy according to the law.		The true problem with deflation is that it does not hide the redistribution connected to changes in the quantity of money. It entails visible misery for many people, to the benefit of equally visible winners. This starkly contrasts with inflation, which creates anonymous winners at the expense of anonymous losers. Both deflation and inflation are, from this point of view, zero-sum games. But inflation is a secret rip-off, whereas deflation means open redistribution through bankruptcy according to the law.