I think that my response answers your statement. Hypothetically, you propose, that things will work great under price deflation. Sure there might have been instances throughout history where it has worked. But obviously there has been periods where it didn't. Consequently, some of the greatest periods of human suffering have occurred during or after a depression. So IMO on the whole I would not want a system with an associated catastrophic risk.
Try to be a bit logic. You dont have to win a discussion with words. We are trying to understand how the economy works, not show who has better rethoric skills.
Lets reduce your argument to absurd. According to your argument we dont want to have price inflation because there was a period of stagflation and you dont want to be associated with catastrophic risk. See how what you said is not really an argument?
The fact that when a bubble pops there is depression and also price deflation does not mean price deflation causes the depression. In fact it is the previous inflationary process that creates the depression. Price deflation is just a natural reaction and is needed for the economy to recover. Price deflation is healthy for the economy (in context).
What are you talking about?? If a tax is levied on someone with money, and that money is given to someone who needs food, will they spend it and thereby increase circulation??? Yes, they will.
The person that will be taxed will spend less. In aggregate one can say nothing will change much. This is chartalist theory. I dont agree with it. Im just saying what the chartalist say.
The aim of the game is to increase money exchange. For every exchange in money there is a corresponding real exchange between people, and that is how real wealth is generated.
No. You are referring to the idea that when two people decide to exchange goods they are both better off because of the subjective nature of value. The problem is it only happens if they are both exchanging them voluntarely. If they are exchanging them because the government has imposed violently a monopolly on money and is using that monopolly to depreciate the currency people will just flead the monopollistic currency but they wont be better off.
They are still related, not directly perhaps, but still related.
Listen, we are here to understand the economy not to win a rethoric constest. Velocity of money and prices dont have a direct relation as you stated earlier. And it is a basic premises of what you said and it being false invalidates your line of reasoning.
But if prices are falling then circulation diminishes.
Not true. As I said earlier there is no direct relation between velocity of money and prices. Prices can be falling and velocity of money increasing. There are examples of this in history.
Your line of reasoning is based on false assumptions and therefore your conclussion is wrong. Credit crunches dont happen for lack of money.
The state must intervene and increase circulation. It can do this by taxing and spending, and/or print money to drive inflation.
So if the State is not going to print more money then it must tax and spend to maintain circulation. i.e tax the bank that has lent, and give to the person who owes the debt.