Perpetuating the fear of deflation is the greatest feat the Fed has ever pulled off.
Deflation is good. Every wage earner becomes more wealthy as their rate of pay buys more. Sticky wages arent a problem with deflationary money. Hell, at least half the complaints about the modern economy are the result of inflation. But, no, deflation would utterly destroy the economy.
Wages have kept pace with inflation over the last decades. This means they earned more currency units over time. If we had 0% inflation, they would earn the same number of units. With deflation they would earn fewer units.
If you want to change the amount of wealth low-income earners have, stop focusing on the units. This is not JPow's fault, it's a job for congress - it's social and fiscal policy not monetary policy. This is just a quixotic quest against the wrong opponent.
If you want to help low-income folks, advocate for unions (so labor can push back against capital), advocate for wealth taxes, higher marginal taxes for the rich, minimum wage indexed to inflation, a strong social safety net and national zoning laws to stop metros from preventing adding enough housing supply to meet demand. Things that would help.
That was from 2013, and written from the perspective that gold represents “real” worth - some platonic ideal constant measure, but it doesn’t. It’s a deflationary non-productive asset whose value is speculative and usually varied with general fear of inflation. Inflation is benchmarked against CPI. This is goldbuggery and fringe economics. By the way; that’s from the Forbes opinion piece section, not Forbes proper.
The author suggests you cannot measure inflation except by dividing by the spot price of gold. This is false, and why we have the CPI.
>Every wage earner becomes more wealthy as their rate of pay buys more.
You will get wage cuts because it becomes harder to employ you at your currency salary or you just get fired. If you can't find a job, deflation will have made your life a lot worse. You are also incentivized to stick with your first job because future jobs will pay less than past jobs. Basically you hope you build a stash of cash in your 20s because your potential to earn money shrinks with every single year but your wealth gains in value from doing nothing.
We are running into that problem with Bitcoin and land. Do you really think that if you signed a contract to get paid 10 BTC per year in 2017 (when it was $20k) that you will still get 10 BTC today? (at $38k). No, you will get 5 BTC this year.
>Hell, at least half the complaints about the modern economy are the result of inflation
Pretty much all of the complaints about the modern economy are about inadequate attempts to fight off deflation. The Fed has reached a point where it cannot do anything to fight off deflation, it takes a pandemic to fight off deflation, that's how bad the situation is.
Just take a look at Japan, they have deflation and nobody is jealous of their economy.
> Every wage earner becomes more wealthy as their rate of pay buys more.
Income is not the same as wealth. Savers become wealthier, debtors (such as anyone with a mortgage) lose wealth.
> Sticky wages arent a problem with deflationary money.
Um, what? Your last sentence was all about how deflationary money guarantees wage earners increasing pay in real terms. That makes the sticky wages problem much worse.
Deflation is good. Every wage earner becomes more wealthy as their rate of pay buys more. Sticky wages arent a problem with deflationary money. Hell, at least half the complaints about the modern economy are the result of inflation. But, no, deflation would utterly destroy the economy.