This story linked from Instapundit reminded me that I wanted to post about deflation.
There’s a lot of talk these days about how some amount of inflation is good. Good cases are made for this. You can read the link and see some economists who obviously cleave to that notion.
I don’t honestly know if the theory is true or not. And there’s one guy there (Burton Folsom) who talks about how the US prospered during the deflation that followed the Civil War.
But what I’ve been thinking about for a while is the unidirectionality of the pro-inflation types. I’m suspicious of it. Economic systems seem to need to flow in both directions. Markets need to expand, but they also need to contract. You just want them to end up a little bigger than before.
Money is essentially a commodity (with certain special properties, to be sure) and it seems to me that it needs to be able to become more or less valuable along with everything else. There’s something odd about being pro-inflation as well, given the pride that countries have in the value of their money. The British have loved lording their pound over the American dollar, and the Euro-promoters loved it when the Euro towered over the dollar.
On the other hand, when money gets expensive, it’s harder to export stuff. So, why all the bitching when money gets cheap?
Sometimes I think economics is just an excuse to complain about whatever.