Ever since the Great Depression, central bankers have, curiously, striven to avoid deflation at all costs. But benign price deflation caused by increases in productivity — as opposed to “bad” deflation caused by a reduction in money supply — leads to a proportional increase in the purchasing power of a dollar. As a result, deflation — unlike inflation — leads to higher living standards and directly benefits savers, retirees, people with minimal debt, and folks living within their means.
The bottom line: Forget government and banker claims. For the fiscally responsible, mild deflation should always be looked at as a blessing — not a curse.
Photo Credit: Derek Jensen