[TheFlyingFish]

Isn't the problem with deflation that it de-incentivizes investment (why accept risk when you can just stuff your mattress with money and grow your wealth risk-free), which tanks the economy?

Lowering prices sounds nice, but my understanding has always been that it would come at the cost of less actual wealth overall.

[SuperNinKenDo]

That's the macroeconomic argument I alluded to. Of course, what this argument amounts to is that economic growth should be fueled in part by devaluing the money of the working and lower-middle class, who earn their money through wages and have limited means of preserving its value through capital investment, while the wealthy, who have more opportunity to invest in capital and use leverage, are largely shieled from, or on the extreme end even benefit from, its effects. Hence, a regressive tax.

The most obvious argument against this notion is that many things are effectively deflationary anyway, such as computers, which at least until recently were deflationary in the extreme. Not only did they tend to get ever cheaper over time, but while getting cheaper they have and continue to become more powerful, at times by miles in the space of a few years. And yet, people still buy computers, and firms still engineer and manufacture them, because at some point it doesn't matter that if you wait 6 months you can get a vastly better computer for half the price, at some point you have to actually buy a computer.

[cyberax]

> That's the macroeconomic argument I alluded to. Of course, what this argument amounts to is that economic growth should be fueled in part by devaluing the money of the working and lower-middle class

You have it literally backwards. Like 100% backwards. In a normal healthy economy, salaries grow faster than inflation. So workers living on their wages are not affected.

Transient periods of high inflation might even benefit them, as they also devalue their fixed _debts_. It's the rich people who are affected by the inflation, they are forced to invest money, rather than just leave them sitting in a risk-free account.

Conversely, deflation primarily causes pain for the working class (that's how Hitler came to power!), because it slows down the economy and makes their debts grow. While rich people can just enjoy having a risk-free real income growth.

[sethammons]

which should disproportionately affect the wealthy. Another way of saying that: we pay higher prices with inflation so the wealthy are more wealthy. That money goes somewhere.

[_DeadFred_]

And hence we had the destruction of the entire tech industry because people never buy computers because tomorrow you can get a better one for cheaper.