1. Like you said, the only difference in the Black Friday example is the price decrease is sustained over the long run, versus perceived as temporary. But all this does is slow down the effect, not change it. When the economy is driven by savings, and not debt, people spend when prices fall.
— Again the underlying framing is forgetting that prices ONLY naturally fall for extended periods because of growth. Meaning the idea that it prevents or halts growth & spending is just fundamentally backwards. Our entire capacity to consume is derivative of our capacity to produce. If we produce more, we will consume more. At the end of the day it really is that simple.
— Also we need to understand the difference between savings and debt spending. When prices fall and we have savings, it creates what’s referred to as “The Wealth Effect.” Things we have wanted, but we’re going to cost all of our savings, are now available if we only use 1/3rd of our savings. Which makes it suddenly viable to make the purchase and not put yourself or family at risk. The wealth from the price deflation is exactly what encourage people to spendOn. We evens see an exaggerated version of this in #Bitcoin. When the price shoots up, people who’ve had BTC savings makes tons of purchases at BTC companies. Nobody buys shit during the best markets.
2. I frame it from consumers because that’s what Keynesians argue. I’m countering their nonsense directly.
— Actually the opposite of your concern with producers occurs. The short term mindset and aggressive “sell as fast as possible” mentality is what happens when all production is funded **with debt.** because they are financed, they can’t think further out, they can’t just pause and wait for a higher quality, or longer term production option. They need to sell immediately and in great quantity.
— When savings is what drives the cycles, producers are far more scrutinizing about their investments being high quality. If they aren’t producing long term value goods, that will be worth the cost of a valuable money, then they DONT waste resources on it.
——— understand this is a fundamentally CRUCIAL incentive. Because the normal deflation is the *average* of growth that’s expected from all other producers. Meaning wasting resources on below average goods and services is actually *destructive* to the creation of value. Less value is created than if they did nothing, and left those resources for someone else. It’s a literal miracle that we have this coordinating mechanism that lets us know how productive our resources have to be. This ensures that only the most valuable, longest lasting investments, with the most clear or potentially massive consumer demand & benefit actually use up our scarce resources.
Lastly, there one more extremely fundamental point that negates both concerns. Which brings us back the the “thermometer” understanding of deflation: If any of those concerns play out… prices don’t fall. Again, this is the most important thing to internalize — the prices fall BECAUSE of growth. So ANY concern you have over it stopping growth, is immediately negated by the fact that the price deflation doesn’t occur if those examples ever played out. They don’t as I hope I explained, but even if they did, it wouldn’t matter because the price would reflect exactly that change.
The economy is literally just a giant balancing force against supply and demand, and it works shockingly well if the money is actually stable in supply. It only breaks down when we cheat the accounting system and our absolute to communicate is poisoned by a bunch of counterfeiters.
