Yeah, but I liked this part of the article better. (see below) It points out the fact that any normal society is inherently deflationary. Any society worth it's salt can easily produce more than it needs. Just shows you what a joke these economists are. They are under the delusion that if a society grows to radpidly you get inflation. You may temporarily at first, but it always ends with deflation.
If you stop and actually look at it, it becomes quite obvious. You produce a whole bunch of bunch of stuff and it becomes inflationary??? Maybe briefly in the begining until somebody notices that you have more than you could ever use, and then it quickly loses it value. It's what happened in Japan. The only problem with Japan was they weren't in a closed system, so they were able to sell their excess capacity, their excess goods, to trade it for money. They traded their problem of too much stuff for one of two much money which leads to bubbles when you have incompetent economists. No matter the result ends up being the same, deflation. And as they have found out, you can play with interest rates and the money all you want and it won't solve the problem.
When you don't have a clue as to what the real problem is, you can apply any number of solutions to the imagined problem, and they will never fix the real one. In the past one solution that governments have used that works in is to have wars. You go around and break and destory stuff. That is one way to solve the problem of to much stuff. Of course it is an insane solution so I don't recommend it. <g> It's actually kind of puzzling why people even consider having to much stuff is a problem. Isn't that like prosperity. When you have more than enough to go around.
Prosperity only becomes a problem when one doesn't know how to handle it. Instead of running around like there is no tomorrow and running up huge debts, one pays off every bill they can get their hands on and becomes debt free. Then if deflation happens. So. Who cares. You see Japan instead of doing the wise thing, decided to have one hell of a party. They've been paying for it ever since.
So back in 96 when Greenie was complaining about irrational exuberance, he should have been telling everybody to pay off their debts. Then he should have taken measures to see to it that they did. Instead he threw a party. A really, really big party. Now there's nothing the matter with parties, providing you pay off your debts first. But since we didn't do that, we now have the very real problem of too much debt and too much stuff. And the only solution the idiot behind the curtain has is to pay with the money. Like that has anything to do with it.
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RELENTLESS PRESSURE. Then, as now, the driving force behind falling
prices was rapid technological change and business innovation in an
intensely competitive economy. "The effects of these periodic setbacks
[deflationary contractions] was to compound for businessmen a major
problem set in secular motion by the new national competition and
technological change -- namely, how to cope with declining prices," writes
Stuart Bruchey in Enterprise, a history of American capitalism.
Today, price levels are telling us much about the evolution of the global
economy, how technology is changing business, and the political/economic
debates that will roil Washington for years to come. Rapid technological
change usually fosters rapidly falling prices. Managers are learning that the
relentless pressure of deflation means that companies must continuously
review all aspects of their business to make sure they're doing whatever it
takes to offer customers high-quality goods at low prices.
AI
