Has any economy, in all of history, collapsed under any hyper deflation scenario like inflation has?
AFAIK, no economy has had hyper deflation.
In the late 19th century the "long depression" was a period of steadily falling prices.
Having said that, most panics or depressions in the US coincided with heavy deflation - but this was sorting the economy, rather than poisoning it.
The difference between libertarianism and socialism is that libertarians will tolerate the existence of a socialist community, but socialists can't tolerate a libertarian community.
No, it never happend in 40 centuries of recorded history.
A "deflationary spiral" only exist in the wild imaginations of keynesian economists, and as a excuse by politicians to create more and more inflation.
There's always a limit to the contraction of bank credit (the reserve fraction), although in practice the mutually exclusive interest of competing buyers always end a deflationary pressure soon enough.
Some would say that the US during the Great Depression sufferred a deflationary spiral and that we were saved by WWII. How do you respond to such a claim (I'm expecting one on another forum)?
Yes, I am a huge Dodgers fan.
Anti-state since I learned about the Cuban Revolution and why my dad had to flee the country.
There was money supply contraction like 30% in very short time. That contributed to the severity of the depression.
That would help the argument that the cause of the Depression was deflation, and not the government. So how would you respond and say that deflation was not the cause, but that government was?
And by cause I mean extending the Depression, not starting, because we all know what started it.
A cough doesn't lengthen a cold--it's merely a symptom. Same thing.
The Great Depression #I didn't end when WW2 started! It ended only thanks to deregulations when WW2 ended. I, being a newbie too, asked that same question just a week or two ago here. If you search, you'll find good documentation about it. Wartime statistics about GDP are unreliable. They reflect a boost of government military expenditure (valued by the gov itself!), while the population suffers from long working hours, ransoned foods and lack of consumer goods. Factors not caught in GDP-statistics. Also, long-term maintenance of machines and buildings lacked because of short-term war aims, causing a large backlog to be taken care of after several years of war.
Concerning the "deflation" or "contraction" of the Great Depression #I, I think that is even much more well documented here! Rothbard has written shitloads about it. You need to take on him on that topic and if you have somehat specific questions after that lesson, then I'm sure there are rocket scientists around here to take care of that!
It's not fascism when the government does it.
“We must spend now as an investment for the future.” - President Obama
This is an interesting question...
I know this thread jumped on the Depression and started looking for examples of it it had ever occurred. But the real question, could it occur? Could your medium of exchange shrink almost instantaneously to the point where individuals are no longer motivated to exchange with each other? Certainly, individuals would find another medium of exchange quickly or simply begin bartering, but is it possible.
Here's an example: say all of my money for a given area is in one "bank". The administrator of the bank decides that he/she has had enough of liviing in that place, takes all the money and skips town. What then? I would consider that to be a hyper deflationary event.
^I suppose in a micro case, it would be deflationary for those invested in the bank. As the money supply is depleted for them.
tonyfernandez:That would help the argument that the cause of the Depression was deflation, and not the government. So how would you respond and say that deflation was not the cause, but that government was?
I would point out that this deflation was merely a response to the 70% inflation that happened during the 20's.
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