Deflation occurs due to productivity gains and to a shortage of money to fully liquidate the value of goods and services in society. When productivity gains occur, they allow more to be produced and thus more people to be born. In aggregate, this increases the value of goods and services in the economy. As a consequence, the amount of money needed to liquidate those goods and services at the same velocity must then rise. If a velocity increase in turnover is required, it forces everyone to buy and sell faster than the natural flow would dictate. This stresses the system if it can't accommodate the higher velocity and of course failures occur.
Gibberish. Productivity gains don't result in a shortage of money, they result in money being re-priced upwards as it buys more. Regardless, ex-nihilo money creation results in either a regressive tax (best case) or outright theft (worst).
Inflation occurs when the money supply is increased beyond the supply needed to liquidate the value of goods and services in the economy at the natural rate. Prices can rise if there is a lack of productivity in key goods that drive the general price level. That is not precisely a problem of inflation.
Inflation is simply the expansion of the money supply by creating money ex-nihilo. Whether it offsets productivity gains or not, it represents taxation or theft.
Your model is incomplete and I have seen it far too often on the internet propounded by hard money advocates. I was one once so I recognize the statements.
It's quite complete, and once you recognize that all criticisms of it are merely an attempt to justify outright theft, then the bogus rationalizations for why we need central banks at all simply disappear. There is no need for anyone to manipulate the money supply for their own interests, or under the presumption of stabilizing nominal prices, we can simply allow the market to re-value money itself. This would be far less regressive, and far less socially and economically destabilizing than the status quo.
Stealing is taking that which does not belong to you. If you exchange your goods and services for money, it really doesn't matter if it's real or fake as long as you can pass it along.
So you're essentially claiming that the crime of counterfeiting really isn't a crime at all, and has no victims. This is a laughable assertion. In fact, if counterfeit money is exchanged for real goods and services and then it is recognized when the vendor makes a bank deposit, the bank will deduct that amount from the vendor's deposit and (presumably) destroy the money, and the effect is as if the counterfeiter stole directly from the vendor.
If, on the other hand, the counterfeits were undetectable, or perhaps they were merely more of the same as issued by the Federal Reserve System and the notes are passed along, then the thief has instead stolen purchasing power from every single saver and person in possession of Federal Reserve Notes around the world, because he has simultaneously increased the supply of them (or something resembling them), as well as reduced the supply of scarce goods, services, or assets available to everyone else. The burden of the victims is expressed in the price level in the form of higher prices than they would otherwise have to pay, both for goods and services, and for assets, including financial, real estate, and other assets.
eye-poppi) bank... I'm a little puzzled as Poland is not historically a prime example of banking stability, but maybe they've sorted it all out recently and are a crown jewel.
