because you find one counter example ie. japan does not disprove the hypothesis that printing money leads to inflation . that is an error in logic in itself. the unarguable is that since the creation of the Fed prices have risen 11x and in the time period before there was price stability. if you created a greater supply of anything it becomes worth less. that is a law of economics. are there factors which can ever overwhelm the consequences of printing money? the answer is yes. with japan as prime example. but there are always exceptions. the way to invest/trade is where the odds are your favor. if gov't print money like crazy the odds favor investing in real assets.
if there are possible errors or counter arguments point them out. however simply do not personalize..
"10 reasons to love rising prices We fretted about deflation, and now we are worried about what to do about its remedy, inflation. Maybe we should embrace it. Friends, readers and consumers, save me your jeers. I come to praise inflation, not to bury it. I think inflation is getting a bum rap. In the U.S. anyway. Sure, runaway inflation in China and Brazil and India looks like it's going to cause a lot of pain to consumers -- a 70% rise in the price of onions in India? (For more on soaring food prices, see my recent column.) It's also beating up investors -- a 20% correction in Chinese stocks? (I wrote another recent column about the dangers of inflation overseas.) Search for what is inflation on Bing What is inflation? But back here in the United States? Bring it on. We need inflation. We should open our arms and hug it to our chest like a long-lost friend. Remember that just a few months ago we (well, the Federal Reserve mostly), were begging for the return of inflation to save us from that ol' economy-wrecker, deflation. And now we want to crush it, stomp on it like a bug? What kind of welcome back is that to our old friend?..." ... http://money.msn.com/investing/10-reasons-to-love-rising-prices-jubak.aspx
This may be of interest to some in this thread: http://en.wikipedia.org/wiki/The_Great_Deflation <i>The Great Deflation or the Great Sag refers to the period from 1870 until 1890 in which world prices of goods, materials and labor decreased. This had a negative effect on established industrial economies such as Great Britain while simultaneously allowing incredible growth in the United States which was just beginning to industrialize. Deflation has historically been more associated with recession, than growth, but this is one of the few sustained periods of deflationary growth in the history of the United States. There were several so called depressions during the period that were actually profit recessions. Many businesses suffered, such as warehousing, especially in the London area, due to improvements in transportation, like efficient steam shipping and the opening of the Suez Canal, and also because of the international telegraph network. Displaced workers found new employment in the expanding economy as real incomes grew. Productivity caused deflation The Great Deflation occurred at the beginning of the period sometimes called the Second Industrial Revolution. It was characterized by dramatic increases in productivity made possible by inexpensive Bessemer steel, the railroad boom, efficient steam shipping and animal powered agricultural mechanization. The prices of most basic commodities fell almost continuously; however, wages remained steady. Goods produced by craftsmen, as opposed to in factories, did not decrease in cost.</i>
This is a graph of the long term consumer savings rate over the last sixty years. As you can see, it has eroded away so much that it went negative in 2005. If this graph went back a little further, you would see that 2005 was the first time the savings rate went negative since 1932 (does that date ring a bell?) You could say that a declining savings rate tends to go hand in hand with a rising level of personal debt. One problem that I've seen with economists, most notably liberal Keynesians, is that they often appear oblivious to the concept of unforeseen consequences of their monetary policies, many of which have been highlighted and studied extensively by the Austrian school. One of these that I've wondered about for a while now is how much the Fed's policy of maintaining steady, continuous inflation by expanding the monetary supply has contributed to the abandonment of savings and reckless accumulation of debt by consumers in America. A pro-inflation policy has far reaching effects - it greatly encourages spending due to the eroding value of the dollar. If I believe that my money will be worth less and less each year, I will be more inclined to spend it rather than hold onto it. Likewise, inflation also makes the accumulation of debt more attractive, since inflation decreases the real amount owed over time. If I owe $1,000 in debt and 10% inflation occurs, assuming that the inflation trickles down through wages, I'll effectively only owe $900 in constant dollars. These two factors, excess consumer spending and excess consumer debt, effectively turned the 2008 recession into a would-be depression by greatly magnifying the effects of the credit crunch. Is it possible that the unforeseen consequences of the Fed's pro-inflationary policy over the last few decades have put us in this precarious situation where our entire economy is built on a house of debt cards on the verge of falling over with the slightest change in wind?
Nothing is bad or good on itself..........just Gold and Satan are the exception. CAUSES are what matters in determining if something is good or bad. Real Growth can't occur without real deflation taking place. After all that is what productivity is all about. Unless you have not taken ECO 101 or scored a C or worse. At the same time deflation can occur under our present monetary system as the supply of money shrinks.......shrinking with it all economic activity. YET in periods of recession or depressions Real inflation is taking place.
deflation is bad not because of falling prices in general, (such as we have had in computer technology) but rather because of falling prices in items that are used as collateral for debt. THis is important because our monetary system is based on debt. When proceeds from a loan are granted it is literally "new money" pumped into the system. When collateral values decline significantly (such as housing) it causes a series of reactions that cause the money supply to rapidly contract. Falling prices in most goods is a sign of innovation and progress. falling prices in collateral items, do to the nature of our monetary system, leads to collapse of the system.
finally someone on this site that actually understands how are monetary system works. instead of trying to guess and passing it off as fact