True. And yet, it still means there is some pushing of demand into the future due to the deflating prices. Which means that your argument in the GGP post is false.
I never said deflation cannot defer people's demand. The comment I originally responded to indicated that a deflation rate of 1% would, in general, discourage spending. I would wager, that almost no one defer buying an iPhone if they knew for a fact that it would be 1% cheaper a year later. Just as I don't think that knowledge that the price would be 1% higher a year later would cause someone to buy an iPhone they were not already planning on buying.
What I'm getting at is falling prices, in and of themselves, are not a huge problem. If you want to say that a deflation rate of 20% would cause huge problems, ok, maybe that's true for some products. Conversely an inflation rate of 20% would cause huge problems in some realms. Inflation is not generally good and deflation generally bad--that is the myth I'm addressing.
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I never said deflation cannot defer people's demand. The comment I originally responded to indicated that a deflation rate of 1% would, in general, discourage spending. I would wager, that almost no one defer buying an iPhone if they knew for a fact that it would be 1% cheaper a year later. Just as I don't think that knowledge that the price would be 1% higher a year later would cause someone to buy an iPhone they were not already planning on buying.
What I'm getting at is falling prices, in and of themselves, are not a huge problem. If you want to say that a deflation rate of 20% would cause huge problems, ok, maybe that's true for some products. Conversely an inflation rate of 20% would cause huge problems in some realms. Inflation is not generally good and deflation generally bad--that is the myth I'm addressing.
1% deflation doesn't shift demand very much. OK, I'll buy that. (Pun not intended, but not avoided.)