We "need" only to hold government's feet to the fire about deficits. If the government adhered to the principles of "spending only what the take in via taxes"... aka BALANCED BUDGET... the currency need not be backed by anything other than the government's taxing authority. But apparently that will never work... as GOVERNMENT ARE SUCH GREEDY, SELF-SERVING BASTARDS THAT THEY CAN'T BE TRUSTED TO DO THE RIGHT THING!
We agree then. My idea is neither for inflation or deflation. But to have the value of a currency to be determined by market forces. Such a thing is better achieved by having a basket of sound assets to back the value of mentioned currency.
If the government spends ONLY what it takes-in via taxes, there will be "financial stability" overall... neither inflation nor deflation. That being the case, where does the problem lie and what is the solution? (Hint... the $USD has lost betwen 95-99% of its value, depending upon the reference, since the creation of the Federal Reserve in 1918).
Correctamundo!! Bernanke and the government decry deflation only because it makes THEM (and the Federal government's deficit spending) look bad.... and they expect the naive American public to buy their swill and spew.
In an inflationary environment, you have EVERY reason to buy a house, in a deflationary environment, you have EVERY reason NOT to buy a house. Housing is one of the biggest reasons deflation is bad, I'm not sure why you're trying to use it as an argument FOR deflation... You think it's that easy? Workers will just say "Sure! We'll take a pay cut, and everything will be fine." Not a chance. Unions for one would never let it happen. The result? LAYOFFS. Businesses making less money, and laying off workers. Nobody hiring new workers. As I said, let a deflationary spiral take hold and watch unemployment skyrocket.
The federal/state budgets are not related to inflation or deflation. It is acceptable to say that the govt finances deficits trough inflation by creating money to balance the budget. But in principle, its is our definition of money, banks, and how much of it we need that really defines our financial system.
The amount of money we "need" is the amount to accommodate the increase in the population... about 1-2% per year. All of the rest is "inflationary confiscation of citizen wealth by the government"...
Re-read this. Soooo discombobulated and stupid, THAT'S IT! NOT LISTENING TO ANY MORE OF YOUR RIDICULOUS SPEW. What happendd to you? Fall down a flight of stairs and scramble your brain? ON IGNORE!