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I can buy a 2014 Cadillac or iPhone 5 next year for 30% less than I can this year. People seem to be buying these things. In a deflationary environment, people
by aneth4 14y ago
I can buy a 2014 Cadillac or iPhone 5 next year for 30% less than I can this year. People seem to be buying these things.
In a deflationary environment, people buy less stuff they don't need today, which leads to a higher quality of economic growth.
- teebs 14y agoWhat do you mean "higher quality"? Almost everything everyone buys is something they don't need. I would guess that almost everyone using Hacker News produces things people don't need. No one needs Google or Amazon or whatever your favorite tech company is.... The economy is built on things people don't need. The problem is that if I won't buy it for $100 today because I can buy it for $50 tomorrow, I won't buy it for $50 tomorrow because I can buy it for $25 the next day, so you NEVER buy an iPhone
- Judson 14y agoI just have a hard time believing deflation leads to perfect demand inelasticity at $0.
- brc 14y agoBecause it is completely unrealistic and total rubbish. That's why you have a hard time believing it. Of course, all those who insist that inflation is a superior state can't explain the economic effects of everyone deciding to purchase today before the prices go up, leading to much weaker demand and production in the future. Bringing forward spending excessively is just as problematic as send it backward into the future.
- aneth4 14y agoExcept I do buy an iPhone. Because I want one. Today. Technology always gets cheaper rapidly. Lots of people seem to buy it. A 4% annual deflation rate would stop unhealthy debt expansion, which only stimulates short term growth and long term pain. Higher quality growth comes when real economic value is created through transactions rather than speculation or inefficient investment.