INFLATION AND DEFLATION EXPLAINED
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Here's the basic logic:
Real capitalism requires capital. So you want to accumulate capital so you can invest, build, progress, whatever your constructive goals are. Inflation constantly undermines your efforts. It becomes unprofitable to accumulate capital by honest work over time, because the price of achieving your goals is always rising.
So you're forced to enter the market and speculate. Maybe you'll make a lot of money faster than the inflation rate, maybe you won't. There's a lot more risk in this environment. Meanwhile, the entire investment banking industry morphs into a casino, because that's the natural tendency for an inflationary environment.
This environment is called a speculative bubble, because all this money is flowing into a high risk environment looking for a safe haven. This results in unreasonably high prices (even more inflation, but this time from a distorted market.)
Then you have a crash because those high prices are unsustainable.
Now for the deflation scenario:
Real capitalism requires capital. So you want to accumulate capital so you can invest, build, progress, whatever your constructive goals are. Deflation constantly supports your efforts, because money that you accumulate increases in value and the price of your goals is always falling.
It becomes more profitable to carefully manage your business and build depth and quality into your affairs for the long haul. Wise decisions and savings are rewarded rather than speculative nervous energy. Investment banking becomes a search for stability and dependable ROI, instead of speculation.
Meanwhile, people who engage in good business practices amass influence and wealth, while gamblers and foolish risk takers get punished.
This is the main difference between inflation and deflation.
How do the banksters use inflation to steal your property?
Central banking is a cartel that assures an inflationary environment. Those at the top of the scam (the political class) enjoy a wealth redistribution from the lower tiers, from the many to the very very few.
Here's how- when a speculative bubble bursts, which is the natural result of an inflationary environment, those with cash on hand have the ability to come in and buy the remains for cheap. Central banks assure that the liquidity is there for their friends (those who receive bailout funds), while their victims are left to the wolves. This is exactly what happened in 2008, and it will happen again.
Which group are you in?
Thanks for an easy-to-understand article.
Is there a place these days that have deflationary economy?
Maybe BTC, due to halving, is a legitimate deflationary economic model, right? Or not, due to its speculative nature.
Wanted to get some views into what type is BTC. Thanks again.
Thanks for the comment- I had no idea you left this here, there's no notification system for Steemit yet, as far as I know.
Yes, BTC would be deflationary, due to the fact that there will only ever be a fixed number of units created.
Another one would be precious metals- as long as we're talking about physical metal. There is only so much and more can be obtained but only with significant capital expenditures in mining. Unfortunately, the market doesn't reflect this because traders have applied a fractional reserve lending model to the metals. (Google fractional reserve lending if you aren't familiar with that term.) So this results in a lot more trading units of gold and silver than actually physically exist to back them up.
So until this manipulated metals market fails, the only deflationary market is BTC or anything else like it that has limited supply. The problem with BTC is the small pool of participants. Hopefully that will drastically change.