Deflation, Inflation?

Recently there has been talk in the media about the dangers of deflation in the coming environment. But the electronics and computer industry have been facing deflationary pressures since its inception.

What should the correct level of inflation/deflation. I always assumed a 1-2% inflation rate would be best. But in fact is a very difficult topic. Money is in essence a substitute for work. We exchange our labor for money. Is the value of the labor of the person making your sandwich worth any more yesterday, today, or tomorrow. In some sense the value disappears once the sandwich is eaten. But what is the value of the laborer who built the Roman roads and bridges that last a thousand years?

The news media says the problem with deflation is that it causes people to delay purchases because they can a better deal later on. Eventually causing a slow down of the economy as more and more people delay purchasing things. But the computer industry has faced this pressure, as each year newer items are both better and cheaper. The news media forgets that there is a utility in possessing an object now. The question for the consumer is the utility of possessing the object now worth the possible savings that can be achieved in future.

Of course the savings of a deflationary environment for the consumer may be offset by the lost of wages by the worker and the lost of interest revenue by the saver. Deflation favors the worker who saves in the past, inflation favors the worker of the future.

On Food

link

"There are more than 1,000 seed banks — including a newly opened, unmanned "doomsday" facility in the Arctic wastes of Norway that will ultimately house more than 1 billion crop seeds. But the one at Wakehurst Place, about 30 miles south of London, says it's the only global facility of its kind, unique for its focus on wild species, not just crops."