> The value of your assets is untouched, the value of your assets relative to money goes down.
Which is a depreciating asset. We trade in money, the value in money has gone down, I've lost money.
> Who told you to go into debt in the first place?
Irrelevant. We're talking about people, and people are not rational actors, they are in debt, so any solution needs to accept that as a fact.
I can see now that you're not talking about our economy, but some idealised economy you've envisioned.
> In a deflationary environment, instead of having to borrow money, from ever more-centralized banks, and when people get in trouble you will see them seek help from decentralized, local, institutions, like families, churches, charities, and mutual aid societies. This naturally limits the spread of risk.
It also limits the availability of help; that approach doesn't scale as well as debt does to all classes of people.
> In a debt-based society, a catastrophe (like say, katrina, or say a meteor hits NYC) ripples throughout the debt network, as the victims are unable to repay their immediate lenders, whose power to pay back their lenders also gets hurt. In a savings based society, the damage done by a catastrophe is a sunk cost.
We don't have a savings based society, and we're unlikely to, so this is just intellectual masturbation; the world runs on debt and credit now, we're not suddenly going to go back no matter what happens.
>> as long salaries keep up with inflation
> They don't
They do, if you lose the idea of staying in one place too long. Change jobs every few years and you'll have no problem keeping up with inflation.
> I went over the mathematics of how the endebted poor are not helped by inflation many, many, posts up.
That's not relevant if they are hurt by deflation even more.
> I'm also unclear as to how deflation steals from the poor. If I am rich, and spending 20% of my income on day to day expenses, and there's 10% deflation, I will be spending 18% of my funds on day to day. That's a 2.5% increase in discretionary spending/investing power (80%-82%). If I'm poor, and spending 90% of my income on day-to-day expenses and there's 10% deflation, I will then be spending 81% of my income on day to day expenses. That is a 90% increase in my discretionary spending/investing power (10%-19%). Sounds to me like a good deal for the poor.
Because you continue to ignore debt. Your arguments assume ideal conditions rather than actual conditions. In this country, in this time, most people are carrying a good amount of debt and deflation hurts them because of that debt. You can't fix that by saying they shouldn't have borrowed in the first place.
> If I'm poor, and spending 90% of my income on day-to-day expenses and there's 10% deflation, I will then be spending 81% of my income on day to day expenses. That is a 90% increase in my discretionary spending/investing power (10%-19%). Sounds to me like a good deal for the poor.
It's also a good example of how to lie with statistics. For a 50k salary, my expenses dropped 4500 a year, nice, but my 200k house just went 20k in the hole as it's now worth only 180k but I still owe 200k. I can throw the entire 4500 savings at paying down the debt, but the net effect is that I'm still down 15.5k; ouch. Debt and deflation do not mix well.
It looks all fine when you're just talking percentages, but plug in actual numbers and the size of the debt load makes a big difference; it's like leverage in reverse, and it's specifically those on lower incomes who will suffer the most as they're the ones who's debt load is going to kill them the most with deflation.
If you're just saying we shouldn't be a debt based society, well ok, I agree that'd be nice, but it's also a fairy tale, because we are a debt based society. And in a debt based society-which isn't going to change-continual inflation is the best option.