What is your solution for an economy that is experiencing a deflationary spiral?

[Vic]

What is your solution for an economy that is experiencing a deflationary spiral?

The obvious answer is to print money and invest in infrastructure.

The time to save money is while you're making it. The time to take on new debt is while you're not.

 

[Vic]

Default on debts is what the free market would force if it were allowed to operate, and clear the debt bubble. But the banks and the government they own wont allow that.

They won't allow that because economies are based on confidence and trust. Your "clear the debt bubble" would shatter both, and guarantee economic depression for an entire generation.

We live in a free society, yet we are not free to steal. Likewise, in a free market, it is still understood that defaulting on a debt can be very much like stealing. That we don't still have debtors prisons is only because we know that prison does not improve the debtors' ability to pay his obligations.

 

[shortylickens]

I dunno if we all use the word deflationary the same.
Since prices are not plummeting on any market goods, we are not in a deflation.
I think.

 

[zephyrprime]

They won't allow that because economies are based on confidence and trust. Your "clear the debt bubble" would shatter both, and guarantee economic depression for an entire generation.

We live in a free society, yet we are not free to steal. Likewise, in a free market, it is still understood that defaulting on a debt can be very much like stealing. That we don't still have debtors prisons is only because we know that prison does not improve the debtors' ability to pay his obligations.

I'm not so sure about that. Look at the Eastern bloc countries and Russia. After their collapses during the 90's and early 2000's, their GDPs were back to precrisis levels in only ~6years on average. On the other hand, trying to mitigate deflationary depressions as happened during the 1930's and in Japan now has lasted for nearly a generation. I believe history shows that complete collapses are actually faster and less harmful that trying to mitigate the problem. I'm not saying that a liquidationist path is good, but it may not be the worst.

 

[palehorse]

stock up on ammo...?