Deflation is less economic growth, inflation is part of economic growth. With deflation you have higher unemployment and lack of investment. Somebody is losing assets in deflation. It causes govt. to have less income from taxes and bigger deficits. You have to grow the money supply for increases in population and increase of economic growth. This is the part hyper inflation predictors miss.Chris wrote:I am not much of an economist can someone tell me why having a strong YEN is bad and why deflation is bad?
One of the major problems of gold or silver is the population and economies grow faster than the amount of gold or silver available. This causes crashes. In paper currencies, if you have too much debt or print too much money you have asset bubbles and crashes. Neither economic system has ever solved this problem. Paper currencies work if your growth is growing faster than the debt. They fail when debt grows faster than growth.
Japan has been in deflation for almost 2 decades and they havent been able to deficit their way out. In other words spur growth faster than their debt. This is their last shot, at least I think so, to get out of the deflationary spiral. All other economies are caught in this spiral now and neither gold/silver based or paper based currencies have solved this problem of deflation. Borrowing works if you pay down the debt during good cycles but govts. are no longer paying down their debt cycles. So now we are here. The only matter left is when we finally decide to bite the bullet and take the pain. Will it be done systematically and organized or will we wait until chaos breaks out? WW2 was one of the results of the last chaos.
