Friday, May 13, 2016

Deflationary spiral in a commodity based currency

Last time I posted here I was curious about the Austrian response to the [new deal](http://ift.tt/1WvpaWM) and you guys recommended FDR's Folly: How Roosevelt and His New Deal which was a great read. I'm still relatively new to Austrian economics so I was wondering what happens when a commodity based currency enters a deflationary spiral. People are obviously more inclined to sit in money (which will be worth more tomorrow) which drives demand down, and a result, unemployment up. I watched a video with a German economist saying that the shareholders should offset costs by lowering production costs. Unfortunately I can't find it but that method seems incredibly inefficient. I know 19th Century America went through extended periods of deflation and I was curious as to what happened to consumption and savings during that period Thanks in advance

link: http://ift.tt/1Wvpd4V