The principles that rule this blog

Principles that will govern my thoughts as I express them here (from my opening statement):

  • Freedom of the individual should be as total as possible, limited only by the fact that nobody should be free to cause physical injury to another, or to deprive another person of his freedoms.
  • Government is necessary primarily to provide those services that private enterprise won't, or won't at a price that people can afford.
  • No person has a right to have his own beliefs on religious, moral, political, or other controversial issues imposed on others who do not share those beliefs.

I believe that Abraham Lincoln expressed it very well:

“The legitimate object of government is to do for a community of people whatever they need to have done, but cannot do, at all, or cannot
so well do, for themselves — in their separate, individual capacities.”

Comments will be invited, and I will attempt to reply to any comments that are offered in a serious and non-abusive manner. However, I will not tolerate abusive or profane language (my reasoning is that this is my blog, and so I can control it; I wouldn't interfere with your using such language on your own!)

If anyone finds an opinion that I express to be contrary to my principles, they are welcome to point this out. I hope that I can make a rational case for my comments. Because, in fact, one label I'll happily accept is rationalist.

Friday, October 07, 2011

What's wrong with deflation?

Lately I have been seeing posts and articles in which the writer gets all hot under the collar about the threat of deflation. Frankly, after living my whole life under inflation, worrying about whether my savings, even with interest, will be worth less than when I put the money away, I welcome deflation — if it will really occur. I've seen the 3¢ stamp of my youth go to 44¢ — and it's probably going to go even higher. I don't ever go to the movies — $10 a pop seems fantastic when, as a kid, I paid 25¢, and adults paid 40¢ — and got to see two movies for the price! Yes, my first job paid $6500 a year, and I had a Master's degree; and now even the guy at McDonald's makes a heck of a lot more than that. But I think I'd rather make the wages I made in the 1960s and 1970s — if prices were also at that level — so I knew that if I put away the money in savings I'd still have its value when I needed it.

People argue that, with deflation, people would never buy anything — they'd forever be waiting for prices to come further down. But you have to eat every day, and things wear out, so you'd need to replace them. And look at the one part of our economy that has been deflationary: electronics. The Commodore 64 I bought in the 1980s cost more in current dollars (not inflation-adjusted dollars!) than the laptop I bought in 2008. And the laptop is vastly more powerful! And even a calculator that I can buy for $10 does as much (or more) than the one I paid $80 for in 1973. Yet people buy computers, and calculators, and don't wait for prices to come further down. They want the items now, and will upgrade in the future. So this is a fallacy.

So, I repeat, what's wrong with deflation? I would be happy to see it!

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