Thomas E. Woods, Jr., is the New York Times bestselling author of 11 books, including The Politically Incorrect Guide to American History and Meltdown (on the financial crisis.) A senior fellow of the Ludwig von Mises Institute, Woods has appeared on MSNBC, CNBC, FOX News, FOX Business, C-SPAN, Bloomberg Television, and hundreds of radio programs... (Read More)
Or so we’re told. The idea is that if prices fall, people will expect them to continue to fall and will therefore postpone purchases, awaiting still better deals. The postponement makes prices fall still further, which makes people postpone their purchases still longer, and so on and on until we’re all dead.
I’ve covered the deflation issue here and there (in this video, for example, and in Meltdown and Rollback), and my LearnAustrianEconomics.com resource has a deflation section, but I like Robert Blumen’s article on the subject today. It’s in effect a deflation FAQ. Go forth and use this knowledge.