Lyn Alden about deflation:
“And yet, deflation is often painted as a terrible thing by central bankers, and by mainstream economists more broadly. In their worldview, prices must continually go up rather than down. In fact, many of them argue that if prices go down, people will delay purchases indefinitely to wait for lower prices (even though we obviously don’t do that with electronics). In their policy framework, prices must constantly go up, excess saving needs to be constantly discouraged, and people need to be kept on a constant treadmill of consumption and borrowing to support continual and smooth economic growth.”
“A key reason why policymakers and economists fear deflation is because deflation is bad for highly leveraged financial systems, and yet leverage is exactly what they encourage to exist through their policies. When everything is built on massive amounts of debt, and policymakers keep intervening to make sure debt levels go ever higher, then deflation can collapse the system if it’s allowed to occur. Persistent deflation is not compatible with high debt levels, and thus not compatible with the modern financial system”
(Broken Money)
CodingInLondon / Matt
npub16n…lftma
2024-03-25 17:09:33
Author Public Key
npub16nd6gm54kk5jf72hzv4glwcqwtka8s28p8x6m4cddxlmum3d8nhs9lftmaPublished at
2024-03-25 17:09:33Event JSON
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"content": "Lyn Alden about deflation: \n\n“And yet, deflation is often painted as a terrible thing by central bankers, and by mainstream economists more broadly. In their worldview, prices must continually go up rather than down. In fact, many of them argue that if prices go down, people will delay purchases indefinitely to wait for lower prices (even though we obviously don’t do that with electronics). In their policy framework, prices must constantly go up, excess saving needs to be constantly discouraged, and people need to be kept on a constant treadmill of consumption and borrowing to support continual and smooth economic growth.”\n\n“A key reason why policymakers and economists fear deflation is because deflation is bad for highly leveraged financial systems, and yet leverage is exactly what they encourage to exist through their policies. When everything is built on massive amounts of debt, and policymakers keep intervening to make sure debt levels go ever higher, then deflation can collapse the system if it’s allowed to occur. Persistent deflation is not compatible with high debt levels, and thus not compatible with the modern financial system”\n\n(Broken Money)",
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}