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Wouldn't across-the-board efficiency gains look like across-the-board deflation? That is, wouldn't automation in and of itself cause hoarding? Why buy a TV this

Wouldn't across-the-board efficiency gains look like across-the-board deflation? That is, wouldn't automation in and of itself cause hoarding? Why buy a TV this year if the one next year will be better and cheaper? Also, hoarding would theoretically only be a problem for the middle and upper classes since the working classes can't afford to save. But the middle and upper classes already hoard, more or less, when they buy and hold real estate. So what's the risk exactly?

ww520 11y ago
Well, money is supposed to enable economic activities; hoarded money not used is money wasted. Yes, increased productivity and efficiency are deflational in nature. You can create N more things now with the same cost. The extra N things push price down if the amount of money in the system stays the same. That's why central banks inject more money into the system to "soak" up the extra economic activities, to maintain a constant and slightly upper price pressure. When people see the price is not decreasing despite increased efficiency, they will spend the money since it worth less tomorrow.
- MarkPNeyer 11y ago
  > ; hoarded money not used is money wasted. If a man walks up to a microphone in a crowded room, and everyone seems him up there, and he could say anything he wants, so that the whole room will hear it - and he says nothing - has he said anything? spending money is 'speaking in the formal language of money' saving money is holding your tongue. https://medium.com/@MarkPXuNeyer/consider-money-as-a-formal-language-ab10d8251ddb#.exbwvo9tn https://medium.com/@MarkPXuNeyer/consider-money-as-a-formal-...
  - ww520 11y ago
    I agree with you at a personal level, but there's a difference between personal finance and money circulated at economy level. Money circulating in economy is money put in good use. Money not moving is useless for the economy.

ww520 11y ago

Well, money is supposed to enable economic activities; hoarded money not used is money wasted. Yes, increased productivity and efficiency are deflational in nature. You can create N more things now with the same cost. The extra N things push price down if the amount of money in the system stays the same. That's why central banks inject more money into the system to "soak" up the extra economic activities, to maintain a constant and slightly upper price pressure. When people see the price is not decreasing despite increased efficiency, they will spend the money since it worth less tomorrow.

MarkPNeyer 11y ago
> ; hoarded money not used is money wasted. If a man walks up to a microphone in a crowded room, and everyone seems him up there, and he could say anything he wants, so that the whole room will hear it - and he says nothing - has he said anything? spending money is 'speaking in the formal language of money' saving money is holding your tongue. https://medium.com/@MarkPXuNeyer/consider-money-as-a-formal-language-ab10d8251ddb#.exbwvo9tn https://medium.com/@MarkPXuNeyer/consider-money-as-a-formal-...
- ww520 11y ago
  I agree with you at a personal level, but there's a difference between personal finance and money circulated at economy level. Money circulating in economy is money put in good use. Money not moving is useless for the economy.