Deflation is a Beautiful Thing

When prices go down, you can buy more! its great you go to the store and you go to the store and surprisingly they cost less. Its a beautiful thing.

Why are all our authoritative figures telling us otherwise? People say "the economy is doing well inflation is 2%" but inflation is not growth1 it just means we are 2% poorer. They say deflation is bad, it will stop people from buying. But hand on now, how does that work? Well apparently people delay spending because they know that it will be cheaper later. I say the whole idea is wrong.


So would you not go and buy a burger because it would probably be cheaper next week. I don't think so, you're hungry right now. We buy things because we want them and we want them when we want them, not next week. you're coach has a hole in it, so you decide not to replace it now and live with the hole for a couple of years so that you can get it cheaper. Well i don't mind holes in my couch but I don't wait two years to possibly get a 10% discount due to my prediction of inflation. oh hell no!

We need to be very carefully when politicians try and frame this idea linking inflation and economic growth. They are not part and parcel one does not lead to the other, the interaction is more complex then that.

Even the term "inflation" is deceptive. what does that have to do with the price of bread! It means your money is worth less couldn't they find a more accurate noun!  Some how "Deflation" actually means your money is increasing in value. Shouldn't we call it "value growth" or "strengthening value"? 

Inflation is confusing for the general population. The reality is that is is a construct that serves people who control assets, wealthy people and government printing money. This is because of a few basic things. I call them the 5 pillars of inflation doom.

1. Inflation effects money so effects people with money most. Its impacts people who have long term financial assets because impact on those people who hold it.

2. When we wealthy people hold lots of dept the increase in inflation reduces the dept faster. 

3. Wealthy people who hold deposits are not effected as interest rates can respond immediately to inflation. 

4. People with money are in more control of their dept and cash levels. When inflation increases or decreases they can respond immediately to change in the inflation rate.

5. The prices of goods increase before wages increases, because employers don't put wages up until they see the impact of increased prices hitting their balance sheets. This normally takes about a year, so the wealthier business owners don't have to respond to the costs of inflation until a year or so later.

6. inflation is a measure of the increase in the cost of living. It immediately reduces the quality of life of less wealthy people. Poorer people must spend all of their money immediately. 

Its pretty simple really, what would you prefer, pay less or more? 

We need to educate ourselves, inflation sucks! Cheap food and shoes are a good thing. We need the sneakers to hide from the people who try to tell us otherwise.