IMHO, deflation would help those who earn wages, while hurting those who own assets. It would reverse a lot of the damage that’s been done by the growing wealth/income gap between labor and capital, which is why I favor it.[/quote]
I think you may be simplifying it a little. Simply, it is a contraction of money and credit. I don’t think this would be expressed favorably towards the bottom half of the country. I think it would be expressed in lower wages, benefits, much higher unemployment and loss of safety nets. Yes, assets would drop dramatically decreasing our collective wealth perception and changing consumption behaviors.
The 2008-2009 crash was an epochal category 5 deflationary shit-storm that gave us a little taste. Employment, wages, assets, peoples consumptive behavior. This, in turn, deflates tax revenues with all the effects. Creating a “death spiral” until all the bad debt is flushed from the system. In this case there is so much bad debt that allowing it all to get flushed would have bankrupt about 90% of the banks in the western hemisphere. Which would have seized up global trade and essentially crashed the global economy in short order.
The main way they chose to stop it was by short-circuiting the default-credit contraction feedback. Meaning they disconnected the banks from the effects of their actions through a myriad of ways to maintain the credit system.
Now, this does not mean I favor what has been done nor do I think what they are doing will fix anything. You can’t stop the inevitable, only delay it while pretending it’s not….
