On reflection, there\u2019s more complexity to inflation and deflation than the simplistic few paragraphs that I wrote a couple of days ago. However, there\u2019s no reason to jump all the way to \u201cjust trust Paul Krugman,\u201d yet. As I think about this stuff, I become more and more convinced that it\u2019s really, really important that more Americans get a better picture of what money is and why it matters (and doesn\u2019t).<\/p>\n\n\n\n
Inflation is a decrease in the value of money relative to time and stuff. Inflation means \u201csalaries go up\u201d and \u201cprices go up.\u201d Fundamentally this sounds like an observation of what happens during \u201cproductive economic times.\u201d Put another way, inflation feels good. I get a raise, or I\u2019m confident and busy enough to charge more for my time. When items are flying off the shelves, I raise prices and pay bonuses.<\/p>\n\n\n\n
Deflation is the opposite. I bite the bullet and take a salary hit when I\u2019m deeply unhappy with my job, when I\u2019m unemployed, or when I need money *now*. When inventory is sitting on the shelves, stores have sales first. Only when the sales don\u2019t work do they actually lower prices to get things moving. Deflation *feels* like failure. Deflation *feels* like hard times.<\/p>\n\n\n\n
For people who live mostly without money, they situations are identical. The ratio of \u201ctime \/ hamburger\u201d remains pretty constant either way. The difficulty and frustration come from measuring things in money. Recall that money is useful because it allows you to, quite literally, save up some time. I do not advocate going entirely without the stuff \u2013 but it\u2019s sometimes useful to get rid of the abstraction and notice that the two things that actually matter didn\u2019t move around \u2013 even though our system did.<\/p>\n","protected":false},"excerpt":{"rendered":"
On reflection, there\u2019s more complexity to inflation and deflation than the simplistic few paragraphs that I wrote a couple of days ago. However, there\u2019s no reason to jump all the way to \u201cjust trust Paul Krugman,\u201d yet. As I think about this stuff, I become…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[45],"tags":[],"class_list":["post-1566","post","type-post","status-publish","format-standard","hentry","category-politics-blog"],"_links":{"self":[{"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/posts\/1566","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/comments?post=1566"}],"version-history":[{"count":1,"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/posts\/1566\/revisions"}],"predecessor-version":[{"id":1567,"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/posts\/1566\/revisions\/1567"}],"wp:attachment":[{"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/media?parent=1566"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/categories?post=1566"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dwan.org\/index.php\/wp-json\/wp\/v2\/tags?post=1566"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}