The Economics of Deflation | Jörg Guido Hülsmann

Archived from the live Mises.tv broadcast, this lecture by Guido Hülsmann was presented at the 2011 Mises University in Auburn, Alabama.

[@earthbjornnahkaimurrao9542]

Deflation is the entire goal of economics, to make prices decrease. Its the point of technology, the point of market competition. Its the only way we improve our standard of living.

[@brettmoore3194]

One problem with the mode of your thinking. First of all when the robber barons conspired and succeeded in defrauding the american people and the world. Only select chosen people benefit from this scam and deprives all others through stagnant wages while devalued prossimory notes.🎉 usury should be banned unless jubalees are enacted by those chosen people

[@earthbjornnahkaimurrao9542]

Everyone knows intuitively that saving is good for the economy whereas getting into debt is bad.

[@brettmoore3194]

How can one save if there is no lawful money. There is only debt issued promissory notes😂

[@godblessallpureheart171]

Excellent video. You are absolutely right.

[@charronfamilyconnect]

@TheBullionBull Market being the community right? The biggest problem I see with Prescious metals is the cumbersome and riskiness of lugging it or storing it away. IF Austrians truly want the market to choose the money then I am all for it. I just can't see though that a gold standard will solve the issue of inflation/deflation etc.... Thanks for an open mind by the way to a new possibility whether it works or not will be seen. I guess some people on here however are Gold deity worshippers. LOL

[@numtybollucks]

Guido is a legend. Also, buy bitcoin.

[@freetrailer4poor]

I wanted to see the other side of the coin. I was looking for an hour long talk by someone like Krugman on deflation and why it is bad. There are none, the more I think about it they are crooks not idiots.

[@earthbjornnahkaimurrao9542]

In short: Deflation = standard of living increases. Inflation = standard of living decreases. Take your pick.

[@NicosMind]

@TheBullionBull A few years ago i actually had a monetarist tell me that Austrian economics was "market based economics". WHich is 100% true. We want everything to be choosen 100% by the people. Businesses should live or die by consumer choice. Not by the whim of a politician. The money should be controlled by the actions of the millions of us cause that reflects the markets preference and not by some comission who only makes thins worst from their intervention. I think we have it best

[@awhodothey]

The bankruptcy process has no effect on production? For real? Like banks are sitting around with a rolodex full of companies of greater competency to replace the owners of every debt. Come on, let's be a little more realistic. The banks will be much tighter about lending if they know the odds of bankruptcy have increased.

[@gerrilevin279]

"Central Banks are the Agency of Special Interests"--59:18

[@bregjejabra25]

Bitcoin fixes this

[@fredflinstone8750]

Buy bitcoin. It has a fixed supply and decreasing inflation schedule which inevitably becomes deflationary. Take back your individual sovereignty by separating money and state.

[@davide4607]

@charronfamilyconnect Keynesian vs Austrian is more about free market vs government intervention than inflation vs deflation. Actually I don't know of any Austrians who advocate monetary deflation. A gold standard would likely result in price decreases, but not monetary contraction (this is what most refer to when talking about deflation). New gold is mined every year so under a gold standard you would have slight monetary inflation, but also decreasing prices as productivity increases.

[@earthbjornnahkaimurrao9542]

inflation means your wages go down every year unless you constantly get raises to compensate. Deflation means your wages would go up every year without needing a raise. Deflation is required and natural if your money supply is limited. Maybe cryptocurrencies can help us see the truth.

[@fredflinstone8750]

Earthbjorn Nahkaimurrao bitcoin

[@BenBurkley07]

yes. you are correct. people would mine gold, (new money, inflation) when the value of that money was more than the price of the goods required to mind that money. (gas, trucks, labor, tools, etc) if you think about it, it could be no other way. if the amount of currency was effective (there was enough specie for small transactions) than no one would mine for new gold.

[@Tigerfire75]

Well do you really think Krugman is smart enough to talk about how deflation is bad for an hour? He can't talk about how it is bad for 10 minutes since it isn't.

[@Tracywithafacey]

I love how he mentions "if there is global warming" and puts it under natural not man made causes ;)

[@Cromius771]

@charronfamilyconnect Yeah but deflation helps out the poor working class and inflation doesn't.

[@charronfamilyconnect]

A gold standard worked well in the agrarian age. Now were in the modern age. We dont need paper money nor metal money anymore. We can use a system of credits to transfer our money electronically, only it doesnt come into existence as a debt/loan but rather a unit of account to account for a good or service based on the markets value placed on it. To me that is a step in a better direction. Why store away a metal that is at risk to theft, and death of your family? Its time to evolve as a society

[@genli5603]

Wow. You really don’t understand money at all. You can have gold backing electronic transactions the same as you had it backing notes and account entries previously.

[@51MontyPython]

The essential reasoning of Keynesians is, "Quick, Help, I need you to create more inflation so my wages can go up!"

[@rajsrivastav6940]

WE NEED DEFLATION !!!!!

[@bregjejabra25]

Bitcoin fixes this...

[@Metal_Auditor]

It's an old joke between them. They used to have neighboring offices, and Block would frequently tell Hulsmann this as a joke.

[@cabgt]

@charronfamilyconnect In your evolved money society scenario do i have a claim to gold or silver anytime i want it or are you saying that the money will be backed by nothing? Will there be central banking etc? You mention that having metals would mean i'm at risk to theft etc. For starters, the govt already steals from me (inflation)! Secondly, i don't recall reading in history books of great theft and murder occurring in U.S. society in the 1800's and early 20th century due to gold.

[@charronfamilyconnect]

@DigitalShaolin that is because they are allowed to create it without any work behind it. Money represents labour/energy, and not credit created out of thin air representing debt which is what we have with the current system. Its not the form that money takes that is the problem, its the way it comes into existance plane and simple. Compounding the problem is that this debt can only be paid with more debt to infinity which is the causd of the problem we have & why I have gold/silver for now.

[@joepeeler34]

@charronfamilyconnect Oh, it's just a "shiny metal." Typical ignorance. Why would you think the price of gold/silver would be falling in relation to other goods? History hasn't borne that out. From 1788 to 1913 (Fed. Res. Act) the purchasing power of money increased by 13% and even higher by some estimates. This should be expected in an environment of productivyt gains and sound money. When the purch. power of metal money increases, the price of money has risen, i.e. prices fall.

[@charronfamilyconnect]

@DigitalShaolin You seem to think more mining of that shiny metal combined with the toxis environmental agents of mercury is a good thing? Have you truly thought it through? I have family in South america suffering with all kinds of ailments because of mans greed for Gold! As for decreasing prices theory why would producers produce something with diminishing returns in such abundance instead of creating something new that has a higher ROI afterall the persuit of profits is mans main goal!

[@charronfamilyconnect]

@DigitalShaolin I wasn't just looking at the face value of the words you wrote but went a little deeper. Typical Austrian Idealists think that mining levels would pretty much balance out the inflation of money like as if it would function as a natural equilibrium. That is just theory not reality in my humble opinion!

[@cabgt]

@charronfamilyconnect Study the history of inflation/deflation. It will become patently clear to you (or it should) that absent hard money accountability and banks receiving govt priviliges, the severe economic booms/busts etc we have seen the last 90 years would not exist!

[@davide4607]

@charronfamilyconnect I didn't say anything about whether we should or should not mine more gold. It makes no difference either way economically. I was just stating how much is mined on average as it would relate to inflation. You have reading comprehension problems.

[@cryptoemcee]

Great lecture, Thanks. Mr. Hulsmann!

[@r44fje]

@charronfamilyconnect Poor people suffer more from price increases than rich people do.

[@charronfamilyconnect]

My observation of the Keynesian economics vs austrian econmoics is equivalent of the schools of thought advocating Inflation vs. schools of thought advocating deflation like as if either theoretical philosophy(not necessarily practical) leads to the best economic outcome.. I feel that inflation and deflation leads to the same outcome namely few wealthy people and many hardworking slaves(working to either pay taxes to government or interest to money lenders/changers to perpetuity.

[@genli5603]

The US was mostly in deflation from 1780 until 1913. You know. When it became a world power with the richest ordinary people in the world.

[@charronfamilyconnect]

@joepeeler34 Seems to me that your Divinity is the old Golden Calf(say didn't moses smash that cash to bits?) LOL! Honestly,I am invested in Silver and some gold(25% of my net worth). The rest of my net worth is in arable farmland and real estate. I think it woudn't be fair(since you dont know me) to say I dont worship and paper deity. I have no problem with gold and silver. I just dont believe we have to back our money with it necessarily. Why monopolize the form of money with a metal?

[@genli5603]

As long as governments can debase it? Commodity money doesn’t help much.

[@hanspanzer]

Must be a fan of Bitcoin :)

[@rsobies]

@TheManiacalSatanist6 he is german

[@Daski69]

natural talker!

[@RKAddict101]

@TheBullionBull I don't think you necessarily have to be a libertarian to be an Austrian, as your post suggests. It wouldn't make much sense if an Austrian wasn't some sort of libertarian or pseudo-libertarian or anarchocapitalist, but the two philosophies are separate. The Austrian school simply refers to a school of thought in economics (whose logic suggests libertarian economic policies would be the best).

[@RKAddict101]

@charronfamilyconnect Obviously you misunderstand a lot about the Austrian theory. Storing gold is not a problem because the gold that currently exists is already stored. Certificates for gold could be used instead of physically moving gold around. A digitalized system of transferring gold could also work. Stating the market should take care of the money supply does mean whatever system you are advocating would become the primary system if the market thought it was for the best.

[@joepeeler34]

@charronfamilyconnect Why didn't you watch the video instead of trolling? Gold and silver aren't just "shiny metals." They are natural monies for following reasons: 1) High unit value per measure of weight (portable) 2) Divisible in that they don't lose value when divided 3) Have non-monetary uses 4) Durable yet malleable so as to fashion into coins 5) Finite but enough exists to function as media of exchange 6) Non-corrosive so make ideal storehouses of value

[@TheManiacalSatanist6]

@rsobies Hmm. Interesting. Considering the inflation panic that Germany had way back, having a German economist talk about inflation/deflation is interesting.

[@charronfamilyconnect]

@RKAddict101 Fair enough, your proposal for a digitized accounting system of the gold thats stored.In that case I think the government & the central banks should give back to the american people all the gold they confiscated in 1933 for starters cause as I see it the average person doesnt have any gold in their possession as it was taken from their ancestors from FDR. Maybe we should store all the known gold in the world and divde by world population and divde it up so we are on even ground

[@joepeeler34]

@charronfamilyconnect It's my understanding that if cash demand holdings increased, then the purchasing power of money would necessarily increase. Less money chasing same amount of goods in other words. The increased purchasing power of money (i.e. gold/silver prices rising) would spur production of gold/silver mining. This makes sense to me. It's true that there would be a lag that isn't present with paper, but this one minor drawback to commodity money is more than offset by the benefits.

[@RKAddict101]

@charronfamilyconnect I agree with the government selling the gold back to the people, but dividing by population to be on even ground is a silly idea in my opinion. Gold will flow naturally (as money does) to those that deserve it (those that produce what consumers want the most). Naturally, different countries will have different amount of wealth. It's not as if every country in the world will suddenly agree to a competing currencies standard, so it would be impossible to work out.

[@ahlbergarn]

Hahaha, is it just me, or has the "Walter Block asked me before my presentation to give my talk more on the free enterprise line instead of my usual interventionist crap"-start of a lecture become a standing inside joke? Seems i've heard it before :D

[@91Eschaton]

look up the liberty dollar it was shut down in 2009. You could offer warehouse receipts in a paper or digital form

[@kmelfina]

50:00 Omg it's such a simple trap to fall into unfortunately.

[@charronfamilyconnect]

Who would you trust to store it for you?

[@Conan_the_Based]

hmm... I learned stuff =9

[@sultanchamp]

Great lecture!

[@HunterfromtheFuture]

Mises Institute FTW!

[@billmelater6470]

I'm having a hard time paring that comment with your avatar.