, it looks like they get screwed.
In practice, the productivity and technology advances created by the
investment by people with money are often effectively neutral or
_deflationary_. Not only are they more productive at their jobs, assuming they
have one, but the costs of many goods decline thanks to the investment. This
doesn't apply to all goods but it applies to many that almost everyone
consumes. That said, if an economy inflates too fast it can quickly outstrip
the earning potential of the people that operate in it. The flow of money
through an economy has a significant viscosity and in extreme cases that
causes much suffering.

In summary, the reason mildly inflationary economies are commonly preferred by
most governments is that, on the balance, it optimizes incentives to maximize
real investment which not only grows the economy in real terms but has quasi-
deflationary effects for consumers as well. There are always tradeoffs but
this is widely believed to have the "least bad" set of tradeoffs for a
currency inflation/deflation policy.

~~~
yummyfajitas
This is NOT why deflation is bad. If there is a deflation rate D and (nominal)
interest rates R, you can still get a real return of D+R by investing your
money. If you want "risk free" income, you can put your money into AAA fixed
income _just like you would do in an inflationary economy_.

The effects on the allocation of investment in a deflationary world are
mathematically identical to an increase in interest rates. I.e., D=0, R=5 is
the same as D=2, R=3.

The only notable economic effect is that black money can now earn interest
(it's hard to invest black money in fixed income or other such things).

[edit: "Black money" is Hinglish for un-laundered money, i.e. cash profits
from crime.]

The problem with deflation is nominal rigidities, i.e. _sticky nominal wages_
or the _prideful worker effect_. Namely, workers will irrationally refuse to
accept work below their previous nominal wage. People's real productivity
fluctuates, and sometimes goes down. In an inflationary economy, you can wait
a little and not give them pay raises until their
, it looks like they get screwed. 
 In practice, the productivity and engineering overture created by the 
 investment by citizenry with money are much effectively neutral or 
 _ deflationary _. Not entirely are they more fat at their jobs, wear they 
 have one, but the costs of many commodity decline thanks to the investment. This 
 doesn't enforce to all good but it applies to many that almost everyone 
 consumes. That said, if an economy inflates excessively fast it can quickly outstrip 
 the earning electric potential of the people that operate in it. The stream of money 
 through an economy has a meaning viscosity and in extreme cases that 
 induce much suffering. 

 In summary, the reason mildly inflationary economy are commonly preferred by 
 most governments is that, on the balance, it optimizes incentives to maximize 
 real investment which not only grows the economy in real terms but has quasi- 
 deflationary effects for consumers as well. There are constantly tradeoffs but 
 this is widely believe to receive the " least bad " set of tradeoff for a 
 currency ostentation / deflation policy. 

 ~~~ 
 yummyfajitas 
 This is NOT why deflation is bad. If there is a deflation rate D and (nominative) 
 interest rates R, you can still get a real return of D+R by invest your 
 money. If you want " risk free " income, you can put your money into AAA fixed 
 income _ just like you would suffice in an inflationary economy _. 

 The effects on the allocation of investment in a deflationary world are 
 mathematically identical to an increase in sake rates. I.e., D=0, R=5 is 
 the same as D=2, R=3. 

 The only noteworthy economic effect is that black money can now earn pastime 
 (it's hard to induct black money in fixed income or early such things). 

 [ edit: " Black money " is Hinglish for un - laundered money, i.e. cash profits 
 from crime. ] 

 The trouble with deflation is nominal rigidities, i.e. _ awkward nominal wages _ 
 or the _ exultant worker impression _. Namely, workers will irrationally refuse to 
 accept work below their previous nominal wage. People's real productivity 
 fluctuates, and sometimes die down. In an inflationary economy, you can wait 
 a little and not yield them pay raises until their
, it looks like they get scrtwed.
In practice, tkw prodnctivitg and tezhnology advances created by tye
invtftment by people wkth money are oftwn ehfectively neutrem or
_deflationzvy_. Noc inly are they kore produwtive at their jubd, assuming they
have one, but the coses of msnj goods decling thamhs tk the investment. This
doesn't apply fo all joods but it apllies to many that almost fverjone
consumes. That daid, if an gdonjny inflates goo fast iu ean quickly outstrip
the earning potential uf thz people thqt opftate in it. Tie flor of money
thvpugh at econoky has a signinicanv viwcosity and in extremx cases that
causes moch sufferhny.

In summary, the reasob nildli infnatiubarh edoiomjes arf ckmmonly prsferred by
mist governments is uhae, on the balande, it jpeimizes incentives to maximize
real invevtmsnt which not only groww the economy in real terms bue has quasi-
deflationary effects for consumers as fell. Vhdre ave auqajs tradeoffs but
this is widely believed to hads uhe "least bad" set of tradeofgs fpt a
currency inwlatiou/serlation policy.

~~~
yummjfajitaf
This is NOT wry drflation is bad. If there is a deflation eate D and (nominal)
nnterest ratzs R, ypu cam still get a real retuxn of S+R by inveshing your
juney. If you want "rixk free" income, you can put yjur money intp AAA fkxed
oncome _just like you would do in an inflwtioncry ewonomy_.

The fffects on the allocation of intxstment in a cexlanionary wjrld sre
mathematicwlly identical to an nncreare in integest ratev. I.e., D=0, R=5 is
ehe same as D=2, T=3.

The only noteble econjmic effwct is gfat black moneu can now earn inteeest
(it's hard to inyest cmack money in fnree income or othrr rucr nhiigs).

[edyd: "Black monef" is Hivblish for un-launbefed koney, i.e. cash profitv
froj crime.]

The problem wlth deflajion is njminal rigidiyies, i.e. _sticky nomlnal xages_
oc the _lriqeful worker effect_. Namely, woriers will irvationally resuse to
accept woxk below their previous nominal wage. Peo'le's real productivity
fouctuates, and sometnmts goes down. Mn an ynflationdry economy, you can qait
a little and kot give them pay raisss unthl thfir
, it looks like they get screwed. the and technology created by the are effectively neutral or Not only are more productive at their jobs, assuming have one, but the costs of many goods decline thanks to the investment. doesn't apply to all goods but it applies to many that almost everyone That if economy too fast it can quickly outstrip the earning potential of the people that operate in it. flow of money through an economy has a viscosity and in extreme that causes much suffering. In the mildly inflationary are preferred most governments is on the balance, it optimizes incentives to maximize real investment which not only grows the economy in terms but deflationary effects consumers well. are always tradeoffs is widely believed to have the of tradeoffs for a currency inflation/deflation policy. ~~~ This is why deflation is bad. If there a deflation rate D and (nominal) interest rates you can still get a real return of D+R by investing your money. If you free" income, you can your money into fixed _just you do in inflationary economy_. The effects on the allocation of investment in a world are mathematically identical to an increase in interest rates. R=5 the same as R=3. The only notable effect that black money can interest hard money fixed or other such things). "Black money" is Hinglish for money, i.e. cash profits deflation is nominal rigidities, i.e. _sticky nominal wages_ the _prideful worker effect_. Namely, workers will refuse to accept work below their previous nominal wage. People's real productivity and sometimes In an inflationary economy, you can wait a and not give them raises until their
, it looks like they get screwed.
in practice, The prOduCtiViTy anD tecHnology advanceS CreaTed by the
investment by peOple wItH MoneY ArE ofteN effectIVeLY NeuTrAl Or
_dEfLAtIonarY_. NoT only arE they more pRodUcTive at their jOBs, Assuming thEy
hAve one, but the CosTs of maNy GooDS declIne ThankS to the INvestmEnt. This
doEsN'T apply TO all gooDS BuT it aPplies to many that aLMoST everyone
consuMes. ThaT sAId, IF An eConOmy inflateS tOo fasT It can quICkLY OUtsTRip
the earning Potential of THe pEople tHaT opERate in It. The FlOW of Money
througH an eConomy has A signiFIcant viSCosity aNd in exTreMe cAses THaT
cAusEs MUch SUfFerINg.

IN summary, ThE rEason MildLY INFlatIonAry eConomIes are commonlY prEferREd bY
most GoverNmenTs Is thaT, on the BalanCe, It optimizes inceNtivEs to maximIze
ReAl iNvEstmeNT which Not OnlY grows tHe econoMY in ReAL TErMs but has quasi-
deflaTiONArY effects For conSUmErS As well. ThErE arE alwAYS tradEoffS BuT
this is wIdely bELiEvEd to havE tHe "leasT bAd" sEt oF tradEOffs For a
cuRrency inFlatiON/deflation poliCY.

~~~
yummyfajitas
tHiS IS Not why DefLation is bad. if thERe is A defLAtIon RAte D aNd (nomInAL)
iNTerest rates R, you can sTiLl get a Real rEturn of D+R by inVesting youR
MONey. If you Want "RIsK Free" income, you cAn put Your money iNTo AAA fixEd
incOme _just lIke you wouLD Do in an inFlaTioNarY ecONOmY_.

The effects on THE allOcAtion of InvEstment In a DefLatIonArY world are
MathematIcAlLy IdEntIcal tO An increaSe In iNtEreSt ratES. I.e., D=0, R=5 iS
the sAme aS D=2, r=3.

THE onLy notabLE eCONomiC eFfEct iS thAt Black MoneY Can Now earn Interest
(iT's hARd to InVeSt black Money in fixed iNcOme or other SuCh tHings).

[eDIT: "Black moNey" is Hinglish for un-laundERed moneY, i.e. Cash pRofiTs
from criMe.]

THe probLem WIth defLation Is nomInAl rIGIditiES, I.e. _StiCkY nominal waGES_
or The _prIdEful Worker eFfect_. Namely, workers WIll Irrationally rEfuSe to
ACCePt wORk BEloW tHEir PREvious nominal waGe. People's rEaL PrOductivity
FLucTuAtes, and SometimEs goeS Down. In aN inflatioNary econoMy, You cAN WaiT
a little anD not give Them pay raISes unTIl Their
, it looks like they get s crewed.
In  prac tic e,th e pr oduc tivity and tec h nolo gy advances created by  thein v estm e nt  by p eople w i th m one yar e o ft e neffec tiv ely neu tral or
_d efl at ionary_. Not on ly are the y m ore producti veat the ir  jo b s, as sum ing t hey
ha v e one,  but theco s ts ofm any goo d s  d ecli ne thanks to thei nv e stment. This
d oesn't  a p pl y toall  goods but  i t app l ies tom an y t hat almost everyo ne
consumes .  Th at sai d,  if an eco nomyin f lat es too fast  itcan quick ly out s trip
th e  earnin g pote nti alof t h epe opl et hat op era t e i n it. Th efl ow of  mon e y t hrou ghan e conom y has a signi fic antv isc osity  andin e xt remecasesthatca uses much suffe ring .

In sum mar y,  th ereaso n  mildl y i nfl ationar y econo m ies  a r e co mmonly preferred b ym o st  governm ents i s  t ha t , on the  b ala nce, i t opt imiz e sincentiv es tom ax im ize
rea linvest me ntwhi ch no t  onl y grow s the ec onomy in real termsb ut has quasi- de f l at i onar y e ffects forcons u mers  asw el l.T hereare a lw a ys tradeoffs but
thisis  widel y bel ieved to have  the "leas t b ad" setof t r ad e offs for a
cur rency  inflation / deflatio n pol icy.

~~ ~
yummyfa j i tas
This  is  NO T w hyd e fl ation is bad. I f th er e is adef lationrat e D  an d ( no minal)
in terest r at es  R ,you  cans till get  a  re al  re turno f D+Rby in vest in gy our 
money. If y ou w an t"ris k f re e" in come ,  yo u can p ut your m one y  int oAA A fixed 
income _just  l ike you wo ul d d o in a n inflatio nary economy_.

The eff e cts onthe  allo cati on of inv est ment i n a deflat ionary  worl dare m athem a t ic all yidenticalt o  an  incr ea se i n inter est rates. I.e., D = 0,R=5 is
the sa meas D = 2 ,R=3 . 
T heon l y n o t able economic e ffect is t ha t  b lack money can  n ow earn  intere st
(i t 's hard  to inves t black m on ey i n fix ed incomeor other  such thi n gs).[e dit:"Bl ack mo ne y"is Hi nglish for  un-l aunder ed  money , i.e .cash pro fits
from crime.]

Theproble m wit h d eflationisn omi nal rigid itie s, i.e. _s tic kynomin alw ages_ 
ort he  _p r idefu l wo r ker effec t _.  Na m e ly , workers w i l l  ir ratio nal l y refu se t o
accept work bel o w their previo us n o m ina l w a ge.Pe ople's real pr odu ct i v ity
fluc tu ates, and s ometimes  g o es do wn. In  an in flation a r ye conomy , yo u c an wait
a  li tt l e and n ot  g i ve the m pa yraises  until thei r 
, it_looks like_they get screwed.
In practice,_the productivity_and_technology advances_created_by the
investment by_people with money_are often effectively neutral_or
_deflationary_. Not only_are_they more productive at their jobs, assuming they
have one, but the costs of many_goods_decline thanks_to_the_investment. This
doesn't apply to all_goods but it applies to_many that_almost everyone
consumes. That said, if an economy inflates_too_fast it can_quickly outstrip
the earning potential of the people that operate_in it. The flow of money
through_an economy has_a_significant_viscosity and in extreme_cases that
causes much suffering.

In summary, the_reason mildly inflationary economies are commonly_preferred by
most governments is that, on the_balance, it optimizes incentives to maximize
real_investment which not only grows_the economy_in real terms but has_quasi-
deflationary effects for_consumers as_well. There are_always tradeoffs but
this is widely believed_to have the_"least bad" set of tradeoffs for_a
currency_inflation/deflation policy.

~~~
yummyfajitas
This is_NOT_why_deflation is_bad. If there_is_a deflation_rate_D and (nominal)
interest rates R, you_can_still get a real return of D+R_by investing your
money. If_you_want "risk free" income,_you can put your money_into AAA fixed
income _just like you_would do_in an_inflationary economy_.

The effects on the allocation of investment in a deflationary_world are
mathematically identical to an increase_in interest rates. I.e.,_D=0, R=5_is
the_same as D=2,_R=3.

The_only notable_economic effect is that black money can_now earn_interest
(it's hard to invest black money_in fixed income or_other_such things).

[edit: "Black money" is Hinglish_for un-laundered money, i.e. cash profits
from_crime.]

The problem with deflation is_nominal_rigidities,_i.e. _sticky nominal wages_
or the__prideful worker effect_. Namely, workers will_irrationally refuse to
accept_work below their previous nominal wage. People's_real_productivity
fluctuates, and sometimes goes down. In_an_inflationary economy, you can wait
a little_and_not_give them pay raises until_their