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> In periods of mild inflation, people have an incentive to invest money ... In periods of deflation ... people have an incentive to put money under the bed Th
by rubashov 15y ago
> In periods of mild inflation, people have an incentive to invest money ... In periods of deflation ... people have an incentive to put money under the bed
This sounds very plausible but simply does not line up with historical reality. Most of the 19th century saw persistent mild deflation alongside massive investment and growth. Inflationary periods have usually seen unproductive speculation and weak capital investment.
The deflation of the great depression was simply the inevitable consequence of a fiat money credit bubble and preceding massive malinvestment. The great depression deflation cannot be characterized as a deflationary tendency of the monetary policy at the time. It inevitably followed the inflationary boom of the 20s.
- william42 15y agoAre you really linking the Great Depression to fiat money when the Great Depression occured while the dollar was still on the gold standard? And there was no «persistent mild deflation» in the 19th century; there were massive swings in value: http://upload.wikimedia.org/wikipedia/commons/2/20/US_Historical_Inflation_Ancient.svg http://upload.wikimedia.org/wikipedia/commons/2/20/US_Histor...
- rubashov 15y agoI'm linking it to the federal reserve act and massive credit growth. Your chart shows persistent deflation in the 19th century with inflationary spikes for wars, notably the civil war.