Is deflation truly that bad for an economy?

[ipbo]

A little bit of inflation is good for economic growth but, when prices begin to fall after an economic downturn, deflation may set in causing an even deeper and more severe crisis.

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[Erdogan]

Hoarding is not negative. Hoarding is the result of speculation on part of one individual that some ware will be more scarce and valuable in the future.  Hoarding makes sure that the stuff is available at the time of need, distributed to those in most want of it through the higher price. Hoarding of money is specially not negative, neither in the now or in the future, because it means that the hoarder in fact consumes less in the now, making goods, including investment goods,  available for a lower price to others in the now.

Hoarding postpones consumption. This, taken by itself, isn't good, is it? Then you come to say that hoarding is akin to speculation, i.e. you hoard something so that you could sell it later at a higher price to those who most want it. That I can't understand, since it is you, the hoarder, who contributes greatly to this need in the first place by stashing something away...

You are confused, probably by the negative connotations of the words speculation and hoarding. So let me use other words.

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Hoarding (savings) & investment are 2 different things.

WRT Investments your capital is at use.  Yes it could be good or bad investments but doesn't matter, the capital is being used

WRT Savings, the capital is just sitting there, frozen.  Might was well consider it not part of economy

Total confusion. Investment is buying capital goods for the purpose of making money. It is not only machinery, it can be stuff like oil or grain. If you save in a commodity, not money, that is investment.

Saving in money, on the other hand, is not investment, it is just saving value for the future. The special thing with saving in money, is that you do not pivot the production structure any specific way. Your demand for money just marginally increases the value of money. Also with lending out your money, you don't affect the market, you invest in what the general market finds most profitable, and you marginally decrease the interest rate.

Just as the consumers affect what should be produced, the money savers direct the investment level. No third party can know better what the level of investment should be.

[Erdogan]

No. Unemployment is not the result of the free market, it is solely a result of red tape to disallow work, and government intrusion into markets. With free markets, it is just as easy to sell your work (get a job) as it is to sell tomatoes, that is, you get a better price for a better product, but you will be able to sell it all. Young people of today may not believe this, but it has been the case in the past. That is how students could travel, split your summer vacation in two, work in one half, travel in the other. There was never a question of how to find work. This was around here (unspecified) in the seventies.

There is nothing systemically different between now & 70's.  Same govt, same Central Bank.  If there is a different economic state, then it has nothing to do with the system.  Has to do with other forces

The difference, at least around here, is that it is easier to get some form of social support, there is much more (and increasing) red tape, more corporate welfare, and so called seed funds that require that you have friends in high places when you want to start a business. The tax is somewhere between your neck and your ears, meaning your new business don't just have to be more profitable than doing nothing, it has to be brilliantly better.

[deisik]

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

I don't think that by this you can create value. Actually, you create deficit and profit by this later...

Because the stuff is more valueable in the future. The value in the future must of course match the cost, the interest and the risk - standard investment accounting.

So, at first you deprive someone of something valuable, then give it back when it becomes more valuable through deficit and call this value creation? I for one cannot call this process as value creation. You, of course, may think different...

[deisik]

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Why consumption is not good by itself? It may not be good but that's what would depend... All in all, why would you produce anything if there would be no consumption for your goods?

In that case I would not produce it. That is the point. The consumers decide, and you need to consume to live, so something will always need to be produced. Why is this a problem?

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

[Erdogan]

Setting usable stuff aside, because your foresight tells you that the stuff will be more needed in the future, is investment. It carries a risk (the future could unfold otherwise) and it costs money (the price of the stuff). If you do this investment, you reserve some of the stuff in the now, when the need is not so vital, to release it in the future, when it is scarce. This way you create value. At the same time, the price of the stuff now will increase as a result of your demand, directing more investments into producing the stuff.

I don't think that by this you can create value. Actually, you create deficit and profit by this later...

Because the stuff is more valueable in the future. The value in the future must of course match the cost, the interest and the risk - standard investment accounting.

So, at first you deprive someone of something valuable, then give it back when it becomes more valuable through deficit and call this value creation? I for one cannot call this process as value creation. You, of course, may think different...

You nailed it, and I can not argue a non argument...

[Erdogan]

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Why consumption is not good by itself? It may not be good but that's what would depend... All in all, why would you produce anything if there would be no consumption for your goods?

In that case I would not produce it. That is the point. The consumers decide, and you need to consume to live, so something will always need to be produced. Why is this a problem?

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

[deisik]

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Why consumption is not good by itself? It may not be good but that's what would depend... All in all, why would you produce anything if there would be no consumption for your goods?

In that case I would not produce it. That is the point. The consumers decide, and you need to consume to live, so something will always need to be produced. Why is this a problem?

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

So you agree that consumption as such is not bad, i.e. it is good? If you agree to this, would you as well agree to a statement that anything that contributes to the increase of aggregate wealth available to a society as whole is good too? I mean anything which is considered ethical in this society and not against human nature indeed...

[Erdogan]

Consumption is not good in itself, that depends on the preferences of the consumers, that is, everybody. Using central planning, confiscation and force to extend consumption now, is destruction of value. I can not understand why people with all senses in behold can echo the nonsense from the statists.

Why consumption is not good by itself? It may not be good but that's what would depend... All in all, why would you produce anything if there would be no consumption for your goods?

In that case I would not produce it. That is the point. The consumers decide, and you need to consume to live, so something will always need to be produced. Why is this a problem?

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

So you agree that consumption as such is not bad, i.e. it is good? If you agree to this, would you as well agree to a statement that anything that contributes to the increase of aggregate wealth available to a society as whole is good too? I mean anything which is considered ethical in this society and not against human nature indeed...

No, only that which the consumer requires and expresses as demand on the market.

[deisik]

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

So you agree that consumption as such is not bad, i.e. it is good? If you agree to this, would you as well agree to a statement that anything that contributes to the increase of aggregate wealth available to a society as whole is good too? I mean anything which is considered ethical in this society and not against human nature indeed...

No, only that which the consumer requires and expresses as demand on the market.

That said, you agree that not all that adds up to the total wealth of a society is good, is it? You simply can't have some part of consumption being allegedly bad, and, at the same time, agree that all increase in the aggregate wealth of a society being good nevertheless...

What is your answer to such a dilemma?

[Erdogan]

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

So you agree that consumption as such is not bad, i.e. it is good? If you agree to this, would you as well agree to a statement that anything that contributes to the increase of aggregate wealth available to a society as whole is good too? I mean anything which is considered ethical in this society and not against human nature indeed...

No, only that which the consumer requires and expresses as demand on the market.

That said, you agree that not all that adds up to the total wealth of a society is good, is it? You simply can't have some part of consumption being allegedly bad, and, at the same time, agree that all increase in aggregate wealth of a society being good nevertheless...

What is your answer to such a dilemma?

Look, I don't know what you are up to, lure me into a socialistic trap perhaps. There is no one that can allege, ethically, that someting is bad or good, except the traders themselves. If you don't like something, don't buy it, argue againts it in the newspapers, you can even associate with a bunch of people to boycott it, just don't use violence or hire some violent people through the voting system to use violence against the traders. That's all.

[deisik]

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

So you agree that consumption as such is not bad, i.e. it is good? If you agree to this, would you as well agree to a statement that anything that contributes to the increase of aggregate wealth available to a society as whole is good too? I mean anything which is considered ethical in this society and not against human nature indeed...

No, only that which the consumer requires and expresses as demand on the market.

That said, you agree that not all that adds up to the total wealth of a society is good, is it? You simply can't have some part of consumption being allegedly bad, and, at the same time, agree that all increase in aggregate wealth of a society being good nevertheless...

What is your answer to such a dilemma?

Look, I don't know what you are up to, lure me into a socialistic trap perhaps. There is no one that can allege, ethically, that someting is bad or good, except the traders themselves. If you don't like something, don't buy it, argue againts it in the newspapers, you can even associate with a bunch of people to boycott it, just don't use violence or hire some violent people through the voting system to use violence against the traders. That's all.

Socialistic trap?! It was actually a logic trap to show you that your point just doesn't stand. You see, your arguments may be incomprehensible, or even bizzare, but they should at least be logically consistent. And now you begin talking sheer nonsense about violence, traders and what not, instead of dealing directly with rather a simple issue...

In fact, it was you who first said that something (namely, hoarding) is not negative

[Erdogan]

The problem is you saying that consumption is not good per se. If you don't produce (i.e. your consumers don't consume), you just don't get richer (and other people through your business activities as well). In real life, though, you would actually become poorer (cost of capital and all the things you said hereto on the matter)...

Consumption is good if the consumer thinks it is good. If he rather wants to save, that is good too. What is not good, is when someone steals the savings and invest it, allegedly for the benefit of the victim.

So you agree that consumption as such is not bad, i.e. it is good? If you agree to this, would you as well agree to a statement that anything that contributes to the increase of aggregate wealth available to a society as whole is good too? I mean anything which is considered ethical in this society and not against human nature indeed...

No, only that which the consumer requires and expresses as demand on the market.

That said, you agree that not all that adds up to the total wealth of a society is good, is it? You simply can't have some part of consumption being allegedly bad, and, at the same time, agree that all increase in aggregate wealth of a society being good nevertheless...

What is your answer to such a dilemma?

Look, I don't know what you are up to, lure me into a socialistic trap perhaps. There is no one that can allege, ethically, that someting is bad or good, except the traders themselves. If you don't like something, don't buy it, argue againts it in the newspapers, you can even associate with a bunch of people to boycott it, just don't use violence or hire some violent people through the voting system to use violence against the traders. That's all.

Socialistic trap?! It was actually a logic trap to show you that your point doesn't stand. You see, your arguments may be incomprehensible, or even bizzare, but they should at least be logically consistent. And now you begin talking absolute nonsense about violence, traders and what else, instead of dealing directly with rather a simple issue...

In fact, it was you who first said that something (namely, hoarding) is not negative

Ok back to hoarding. Why do you think coffe is available all year round, even if coffee is harvested only once a year? Why do you think skis are available in ample supply just when you need them in the winter vacation, even if they are produced all year round? Why do you think a flight is available to you just when you need to go to that conference, even if it takes years to build an aeroplane, and the owner could not possibly know your plans? Why do you think someone just gives you an umbrella when you hit the street in New York, without you having ordered it in advance?

It is all hoarding. You want to glue some high flying ehics to it, but there isn't.

[deisik]

Ok back to hoarding. Why do you think coffe is available all year round, even if coffee is harvested only once a year? Why do you think skis are available in ample supply just when you need them in the winter vacation, even if they are produced all year round? Why do you think a flight is available to you just when you need to go to that conference, even if it takes years to build an aeroplane, and the owner could not possibly know your plans? Why do you think someone just gives you an umbrella when you hit the street in New York, without you having ordered it in advance?

It is all hoarding. You want to glue some high flying ehics to it, but there isn't.

I think you are misusing the term. I simply can't grasp how building an aircraft can have anything to do with hoarding. Hoarding, as per Wiki, "occurs due to individuals obtaining and holding assets thought to be undervalued and build up reserves of it in hopes to profit or save money later"...

Also note that I don't say that reaching for profit is bad per se

[Erdogan]

Ok back to hoarding. Why do you think coffe is available all year round, even if coffee is harvested only once a year? Why do you think skis are available in ample supply just when you need them in the winter vacation, even if they are produced all year round? Why do you think a flight is available to you just when you need to go to that conference, even if it takes years to build an aeroplane, and the owner could not possibly know your plans? Why do you think someone just gives you an umbrella when you hit the street in New York, without you having ordered it in advance?

It is all hoarding. You want to glue some high flying ehics to it, but there isn't.

I think you are misusing the term. I simply can't grasp how building an aircraft can have anything to do with hoarding. Hoarding, as per Wiki, "occurs due to individuals obtaining and holding assets thought to be undervalued and build up reserves of it in hopes to profit or save money later"...

Also note, that I don't say that reaching for profit is bad per se

Well everything mentioned fit into that definition. Someone has to own the plane, also while it is being built. Just lose the simplistic moralism related to the word hoarding, and you will be able to see.

[thaaanos]

Hoarding
Just because a strategy may be good for an individual that doesnt neccessary mean that it will be good when applied by everyone.
Bringing arguments that this or that is good because someone does profit is irrelevant, if that cannot be generalized.
Ie It is good for a rabbit to eat grass, it is good for a rabbit to survive wolves, if every rabbit did that though there soon be no rabbits left
Unemployment
How can free market be irrelevant, free market is an economic system, employment is a variable in this system! ?!? Output reduction leads to unemployment, unless you expect bussinesses to keep staff idling
Free market
Freedom in free market is an illusion, a rabbit is free to get eaten by the wolf. Central planning does not need wolves it gets by with birth control,

[deisik]

Ok back to hoarding. Why do you think coffe is available all year round, even if coffee is harvested only once a year? Why do you think skis are available in ample supply just when you need them in the winter vacation, even if they are produced all year round? Why do you think a flight is available to you just when you need to go to that conference, even if it takes years to build an aeroplane, and the owner could not possibly know your plans? Why do you think someone just gives you an umbrella when you hit the street in New York, without you having ordered it in advance?

It is all hoarding. You want to glue some high flying ehics to it, but there isn't.

I think you are misusing the term. I simply can't grasp how building an aircraft can have anything to do with hoarding. Hoarding, as per Wiki, "occurs due to individuals obtaining and holding assets thought to be undervalued and build up reserves of it in hopes to profit or save money later"...

Also note, that I don't say that reaching for profit is bad per se

Well everything mentioned fit into that definition. Someone has to own the plane, also while it is being built. Just lose the simplistic moralism related to the word hoarding, and you will be able to see.

The plane doesn't fit into this definition at all. While it is being built, it is not a plane yet, since it can't fly. And even if it could, it won't be allowed until it is completely finished. I hope at least this won't be a matter of dispute. To say that an aircraft building company hoards details to sell them later as a plane at higher price seems to be completely divorced from reality...

Why do you keep saying that I'm trying to attach some form of morality to it?

[Erdogan]

Ok back to hoarding. Why do you think coffe is available all year round, even if coffee is harvested only once a year? Why do you think skis are available in ample supply just when you need them in the winter vacation, even if they are produced all year round? Why do you think a flight is available to you just when you need to go to that conference, even if it takes years to build an aeroplane, and the owner could not possibly know your plans? Why do you think someone just gives you an umbrella when you hit the street in New York, without you having ordered it in advance?

It is all hoarding. You want to glue some high flying ehics to it, but there isn't.

I think you are misusing the term. I simply can't grasp how building an aircraft can have anything to do with hoarding. Hoarding, as per Wiki, "occurs due to individuals obtaining and holding assets thought to be undervalued and build up reserves of it in hopes to profit or save money later"...

Also note, that I don't say that reaching for profit is bad per se

Well everything mentioned fit into that definition. Someone has to own the plane, also while it is being built. Just lose the simplistic moralism related to the word hoarding, and you will be able to see.

The plane doesn't fit into this definition at all. While it is being built, it is not a plane yet, since it can't fly. And even if it could, it won't be allowed until it is completely finished. I hope at least this won't be a matter of dispute...

Why do you keep saying that I attach some form of morality to it?

I don't want to play.

[dinofelis]

Hoarding
Just because a strategy may be good for an individual that doesnt neccessary mean that it will be good when applied by everyone.

This is the fundamental flaw in collectivist thinking.  If a strategy is good for an individual, it is good when applied to every one because every one is an individual.  If it isn't good for every one, then it wasn't good for an individual either.

Typical example: having a lot of children.  Is that a good or a bad thing for an individual ?  Is it good or bad that I have 10 children ?  If my aim is Darwinistic, and I want to get as much of my genetic material in the next generation, what should I do ?  Breed like rabbits, have one kid, have no kids ?

You may say: if YOU have 10 children, that might be Darwinistically good for YOU, but if EVERYONE has 10 children, the world will go down in over population.

No.  In fact, I should have as many children as I can economically support efficiently.  If I have enough economic means to educate well, 5 children, that's what I should do.  If I make less children, I will diminish my genetic presence in the next generation, and if I make more of them, they will be economically weaker and may not survive the next round.  If I optimize the number of children, and my economic value so that each of them reaches a good level to start in live, then that's my best solution.

And now, it turns out that if everybody would do that, that is, optimise its number of kids as a function of his own economic power, then that that would also be globally the best solution.  Poor people wouldn't make kids because they would starve any ways.  Rich people would have a lot of children.  In the end, you would have an economically better balanced next generation.

But that doesn't happen, because there are obliged economic transfers from the rich to the poor, who allow poor to breed more poverty. 

So even in the most "collectivist" a priori questions, you see that if everybody really optimises for one-self, everybody optimizes for one-self.  In fact, that's nothing more than game theory.

[dinofelis]

I don't think that by this you can create value. Actually, you create deficit and profit by this later...

I think the misunderstanding between both of you comes from two different views of hoarding.

The first view on hoarding is that you store stuff when it is cheap (that is, when there is a lot of offer, and not much demand), and you sell when it is expensive (that is, when there isn't much offer, and there's a lot of demand).

This is the "good" kind of speculation, that softens scarcity.  It is the chipmunk that puts nuts aside in summer for the hard season.  When nuts are abundantly available, they don't consume everything, but they put aside some.  When there are no more nuts available, they live off their hoarded savings.

Hoarding that way increases prices when things are cheap, and decreases prices when things are expensive, as such stabilising price.  The benefit you make on hoarding is exactly equal to the price difference.  Hoarding stops being interesting when price is totally stabilised and there is no "cheap" and "expensive" season any more.

But the other view of hoarding is "pump and dump" market manipulation.  In an a priori constant price market without temporary preferences ("summers" and "winters" for nuts), you might try to manipulate the market by storing a lot of stuff, making buying contracts at "normal price", by your hoarding, you increase the market price, and when the stuff that became scarce because of you having bought half of the available production, you make sales contracts at higher prices, and then dump everything on the market.

The point is of course that in order to do so, you need to be able to buy a significant fraction of the market.

So "pump and dump" can only happen with very significant sole players on the market, or by a cartel.  However, the normal hoarding behaviour can be done by many many small independent hoarders.

Many small, individual hoarders cannot do a pump and dump, because the whole trick is to be perfectly synchronized in buying "just before" the scarcity, and selling "just before" everything floods the market.  If you are slightly out of sync in a pump and dump, you loose instead of gaining.