a) I got into a discussion with my brother about deflation. He thinks that deflation would lead to there being little capital investments going on. How do I show that deflation will lead to more capital investments?
b) There are 3 definitions for inflation that I'm aware of: 1) increase in prices 2) increase in money supply 3) borrower is favored over the lender. I like 3), my brother likes 1), and Austrians like 2). Which is the best?
Also, I believe that deflation should have the opposite definition as inflation (so if 2) was good, would deflation be a decrease in the money supply? **** Also, there is a youtube video I like called 'deflation is normal' where the speaker assumes a society with a FIXED amount of money, so I don't know how the money supply can be altered) Also (these requests are starting to pile up) could someone explain what is bad about using definition 3)?
Thanks a lot.