The real ailment of the economy is depressed demand. I tell
you one thing, someone has noticed or not, “the economy must have increased in
terms of real wealth since the price level has almost touched the bottom and
deflation was a problem.” This is equivalent to saying that the value of
one-dollar has increased, meanwhile. The economy can take advantage of this
scene; too, if it wants to reduce the effect of the erosion of the current
wealth adjusted inflation of the current period and it does not want to print
money in higher denominations. But printing money in lower denomination is
helpful. As a symbol, if we mint coins of copper now, we can chose to mint coin
of a lower value, or, 1 cent now equals 100 tenc and let the economy deflate.
As the economy will deflate the value of 1 cent will increase and will increase
the real purchasing power of the masses, especially for those who have less
wealth. And, that would create demand, the economy is looking for. From a
deflation, if everybody has a job, we have to gain and not loss because real
wealth in terms of its purchasing power increases if income is fixed, but that
is not possible, because if prices go down wages go down, too. Economy will
have to start living with low prices but perhaps with greater purchasing power.
Certainly in this scene if wealth has not gone down, it has increased, in real
terms…
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