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Something is very wrong in economics. Falling prices increase the standard of living and spread prosperity. This is what built America. I can't help but thin

Something is very wrong in economics. Falling prices increase the standard of living and spread prosperity. This is what built America. I can't help but think this is a con game being played on us when people call it "deflation." If they had advised Henry Ford, he wouldn't increased wages to his employees and dropped the price of his car. There are also many unexpected events that would make you spend money: Pregnancy, illness, a Shiny New Thing, etc. Amazon would have kept its cloud services prices high too. I lived through the stagflation of the 1970s. There is no way in hell people can ever convince me inflation is a good thing.

drharris 14y ago
I think you're only looking from a consumer perspective, not a business perspective. What is my incentive to start a business when it's constantly a race to the bottom? Furthermore, why invest in a business? It'd be stupid to put $1000 in an investment when the spending power of that money will only increase over time, and you'll never get your money back. No, I don't think you'll find many economists who like deflation. It doesn't spread prosperity, it spreads laziness.
- mikecane 14y ago
  Then explain to me why Bezos has no problem constantly cutting prices for his cloud services. Why Jobs priced the iPad at $499 for the base model when even he acknowledged the buzz was $999 -- and he might have even gotten that. >>>It'd be stupid to put $1000 in an investment when the spending power of that money will only increase over time, and you'll never get your money back. How do you know you'll never get it back? The entire point of investing is to make money faster than via labor or interest or prices artificially increasing (a bubble).
  - jbooth 14y ago
    He's cutting prices, but we are not in a deflationary environment. I think you're a little mixed up on the definitions of "inflation" and "deflation".
    - mikecane 14y ago
      Yes, I see why you would think that. And it's perhaps because I'm looking at it from a consumer standpoint too.
danielweber 14y ago
There is no way in hell people can ever convince me inflation is a good thing. I believe this sentence. The big problem with Bitcoin's finite money supply is that it encourages people to sit out. If there are 1000 people and someone has WLOG 1/1000th of the wealth, if they sit things out and come back 100 years later, there's no reason to think they should still have 1/1000th of the society's wealth at that point. More people were born, more resources were mined, more buildings were built, more technologies were developed -- and that person had nothing to do with it. I can see why he would wish he could still claim 1/1000th of society's wealth, but what's the incentive for all the other people to agree to this? The hope that they can be the ones to sit things out and freeride next time?
maxerickson 14y ago
Falling costs increase the standard of living and spread prosperity. Nominal prices can go up while costs are going down (this is more or less what inflation is). Putting it another way: in an inflationary economy, if the price of a good stays the same, the cost of that good is going down.

drharris 14y ago

I think you're only looking from a consumer perspective, not a business perspective. What is my incentive to start a business when it's constantly a race to the bottom? Furthermore, why invest in a business? It'd be stupid to put $1000 in an investment when the spending power of that money will only increase over time, and you'll never get your money back. No, I don't think you'll find many economists who like deflation. It doesn't spread prosperity, it spreads laziness.

mikecane 14y ago
Then explain to me why Bezos has no problem constantly cutting prices for his cloud services. Why Jobs priced the iPad at $499 for the base model when even he acknowledged the buzz was $999 -- and he might have even gotten that. >>>It'd be stupid to put $1000 in an investment when the spending power of that money will only increase over time, and you'll never get your money back. How do you know you'll never get it back? The entire point of investing is to make money faster than via labor or interest or prices artificially increasing (a bubble).
- jbooth 14y ago
  He's cutting prices, but we are not in a deflationary environment. I think you're a little mixed up on the definitions of "inflation" and "deflation".
  - mikecane 14y ago
    Yes, I see why you would think that. And it's perhaps because I'm looking at it from a consumer standpoint too.

danielweber 14y ago

There is no way in hell people can ever convince me inflation is a good thing. I believe this sentence. The big problem with Bitcoin's finite money supply is that it encourages people to sit out. If there are 1000 people and someone has WLOG 1/1000th of the wealth, if they sit things out and come back 100 years later, there's no reason to think they should still have 1/1000th of the society's wealth at that point. More people were born, more resources were mined, more buildings were built, more technologies were developed -- and that person had nothing to do with it. I can see why he would wish he could still claim 1/1000th of society's wealth, but what's the incentive for all the other people to agree to this? The hope that they can be the ones to sit things out and freeride next time?

maxerickson 14y ago

Falling costs increase the standard of living and spread prosperity. Nominal prices can go up while costs are going down (this is more or less what inflation is). Putting it another way: in an inflationary economy, if the price of a good stays the same, the cost of that good is going down.