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What is good for an economy – inflation or deflation?

We often hear about inflation. Recently, more about dangers of deflation.

So I thought I will write about this phenomenon as I have noticed from the point of view of employer -`capitalist` and employee- `labour`.


Men have short memories, a few years of inflation or deflation taken to continue forever and economic decisions are based on them.



Moral of the above story!

In a capitalist system, where capitalist is free to employ his capital to whichever source is most profitable, labour also has this choice and should make this choice of providing his services to the capitalist who pays him the highest wages.


The question arises why does capitalist makes this choice and labour does not?

Answer: Habit.

Man is a slave to his habits.

A capitalist is thinking about his investment decision practically every day.

And an employee makes it very occasionally. Usually when he is forced by circumstances.

Labour has nothing to offer but himself; thus one should always gain knowledge, experience + new skills to make oneself more valuable and constantly change employers.