Is a Deflationary Gold Standard Bad?


Bron Suchecki on Citizen Economists site explains why CPI deflation is not to be feared, and why is normal state of the economy. As time goes by, it is now looking that now more and more people are beginning to see through the News Media’s anti-deflationary propaganda and come to their own conclusions based on their own observations and experiences in life.

Citizen Economists. July 10, 2009.

Is a Deflationary Gold Standard Bad?

I’ve never really got why a gradual deflationary bias was a problem. Consumers know, for example, that just about any electronic good (computers, plasma screens etc) will get cheaper in the future, yet this does not seem to stop them from being made and bought. The fact that only those people who really really want the good will buy it and those are no so enthused will wait until it gets cheaper does not seem to stop business from making money.

If it was conspicuous consumption fueled by debt (and an inflationary bias) that got us into this mess, then would not a system with a deflationary bias be the solution? It has a built in frugality: your money will have more purchasing power in the future, so only buy today what you actually need. People would also only want to take on debt if they were actually going to be productive/efficient rather than just trying to bubble up asset prices. Now maybe if we can convince Greenies that a Gold Standard would work against consumerism and thus be good for the planet, we’ve got a chance.

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