deflation can cause economic problems

[skyway1]

. Isn't that a huge problem? I learned in economics class that deflation can cause economic problems.

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[calkob]

so can inflation, what's your point, a few examples of how you think deflation can cause huge problems would be nice, a quick Google search on benefits of deflation will give you a raft of links from economists saying how deflation can be a good thing.  so don't just believe everything your economics teacher told you.  A lot of what people believe to be good or bad comes down to their politics and personal belief of economics

[Pab]

All that deflation is just a excuse for massive printing and lowering rates
deflation is not a problem.Central banks and greedy banks are problem

[pitham1]

. Isn't that a huge problem? I learned in economics class that deflation can cause economic problems.

Bitcoin is not going to be the only currency around. People would not like to borrow in a deflationary currency, they would just use alternative currencies. Borrowing and consumption will go along.

[KoinKartel]

If you attend a government funded school then your "education" is being paid for by the same people that created a system that turns people who save their money into the biggest losers in the economy.

This same government are the ones that create your curriculum and thereby create an entire legion of accountants, financial advisers, bankers etc that are trained to either 'look the other way' or to unknowingly participate in stripping nations of their wealth.

Under a system of inflation, individuals that choose to save their money INADVERTENTLY end up LOSING the most money. And this occurs due to inflation.

Whenever the central bank prints money into existence, the preexisting supply loses value. In criminal law, this is known as theft by deception... In finance this is known as "inflation."

Under a deflationary financial system, scarcity prevails. The supply of money restricts over time... which causes the preexisting supply to become more valuable. Which causes savers to generate the MOST money out of all economic participants.

You have to understand that money is only a means of transaction. Money doesn't necessarily = wealth.

ASSETS that generate money = wealth.

Central banks print money, and then immediately turn this money into assets by loaning this money out to banks, large corporations and governments, slapping interest on top of the loans, thereby creating debt repayment obligations = ASSETS. And when the money circles back, they do the same thing again.. So it's almost like a share buyback scheme that allows them to perpetually generate revenues out of thin air.

However, in order to do this, they have to create the money first... which dilutes the value of the preexisting supply. It's the perfect robbery. Some poor old saver can look at his bank balance and see $100,000... and by the years end, his balance will still show $100,000 but will have LESS buying power because of dilution caused by "quantitative easing."  

The opposite of this would occur if we had a deflationary financial system

So, does deflation cause economic problems? 100% yes! But, only if you're a central banker who wants to print limitless amounts of monopoly money and plunge an entire nation into poverty and debt

[alyssa85]

. Isn't that a huge problem? I learned in economics class that deflation can cause economic problems.

It can cause problems if you have a lot of debt in your economy. Basically deflation forces down prices and earnings (as prices drop earnings drop too because business can't afford to pay as much). However if you have debt in this situation, the amount you owe stays the same, even while your earnings drop. Not good.

Basically deflation only works well in economies with no debt.

[yenxz]

. Isn't that a huge problem? I learned in economics class that deflation can cause economic problems.

its huge problem to country that never have deflation,they would panic and of course its cause economic problems,but for country who have experience in deflation case,they mght have solution.

[lissandra]

We are not in this situation though lol.

We are in the terms of inflation, where cost of rise of living goes up while there arent any progressive growth to match its costs.

Its been a on-going struggle for the longest which is why california is one of the first to become a $15 hr minimum hr.

[danda]

OP, check your premise.