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Old 22nd June 2011, 09:20   #5
LordOfTheShrooms
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Join Date: Jan 2003
Location: Texas
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Re: Random shit thread

If that wasn't all boring enough already, here's some economics:

Here I will briefly explain why deflation is a good thing when you have a sound currency (read: commodity backed), despite what mainstream economists will tell you. I'm skipping over all the reasons why commodity backed currency is always preferable to a fiat currency because that post will take longer and my attention span won't hold for that long right now. I'll probably wind up showing one or two reasons for this in the explanation of deflation though.

With a commodity backed currency, the supply of money remains relatively constant over time (after all, the government can't just conjure up additional gold). The number of products in an economic system grows over time. This means that the same amount of money is chasing more products, thereby decreasing the supply of money relative to products available. The net outcome is that the same amount of money is more valuable and as such, will buy more stuff.

Imagine that the economy has a total of $10 that is going to be spent and there are 2 products available. The equilibrium price set is $5 per item (or some variation that still adds up to $10). But now let's imagine that a new widget has just been put on the market and there are now 3 products available. The equilibrium price has now gone down to $3.33 per item. The same $10 dollars has now gained you 3 items instead of 2.

Yet somehow, this standard of living increase is labeled as destructive.
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