Wednesday, April 6, 2016

Good deflation vs bad deflation

Good deflation is basically driven by supply increasing faster than demand. Bad deflation is the opposite. You get good deflation largely by technology improvements. I think there is a lot of technology that is not in fruition, that will be driving the economy later, but in the mean time we are in a age of deleveraging where we are working off excess debt and during this time bad deflation is what reigns.

Good and bad deflation also depends on which country you are in. Deflation is great for Chinese because they were replacing US workers but it is reverse in this country.