The money supply is worked on the idea that tomorrow's money is cheaper than todays - hence if you want me to give you tomorrow's money, I charge you interest. Deflation is where tomorrow's money is worth more than todays - so you want to hide it under the floorboards and not spend it, as things will be cheaper next week.
We already have this idea in the tech markets - a brand new graphics card costs 500, a few months later its 250.
Of course, if we have general deflation then wages go down too (why should your employer pay you more when everything is getting cheaper?). Japan had it for years, and 'the man' DOES NOT KNOW how to get out of it once you're in it.
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timeasmymeasure
no subject
Date: 2009-01-10 09:03 am (UTC)The money supply is worked on the idea that tomorrow's money is cheaper than todays - hence if you want me to give you tomorrow's money, I charge you interest. Deflation is where tomorrow's money is worth more than todays - so you want to hide it under the floorboards and not spend it, as things will be cheaper next week.
We already have this idea in the tech markets - a brand new graphics card costs 500, a few months later its 250.
Of course, if we have general deflation then wages go down too (why should your employer pay you more when everything is getting cheaper?). Japan had it for years, and 'the man' DOES NOT KNOW how to get out of it once you're in it.