In 2012, I came back and seriously looked at this page. I thought very hard about deleting it as it’s full of very wrong and misleading information.
Instead I’ve decided to leave it with this warning. It’s helpful in that it’ll remind me I am wrong about things, and can learn. HAVE learned.
You can read what follows and laugh if you wish. Won’t bother me much at all.
Rather than explaining myself every single time I use some words, here are some definitions, sometimes with comment.
Austrian. (See Economic Philosophy, Austrian.)
Deflation(A) – the reduction of total money supply. Believed to cause an increase in the purchasing power of remaining units of money, seen as a general decline in the price of goods and services. See inflation(A) and inflation (C) for more discussion. Often confused with deflation(C).
Deflation(C) – A general decline in the price of goods and services. Sometimes (wrongly) called Keynesian deflation. See inflation(A) and inflation(C) for more discussion. Often confused with deflation(A).
Economic Philosophy, Austrian. The economic philosophy rooted in the scholarship of Ludwig von Mises. At its core, it is supply-oriented. That is, as all economic conditions are a duality of supply vs demand, this school emphasizes control and adjustment of supply as the critical issue for optimal benefit to society. The school emphasizes the advantages of rigid monetarism and free trade. NOTE: Austrian school proponents tend to think that changes in the cost of goods [inflation(C)/deflation(C)] are normal events in the economic cycle, and the nature of the free market with a constant money supply will keep these events within reasonable bounds resulting in a generally growing economy.
Economic Philosophy, Keynesian. The economic philosophy rooted in the scholarship of John Keynes. At its core, it is demand-oriented. That is, as all economic conditions are a duality of supply vs demand, this school emphasizes control and adjustment of demand as the critical issue for optimal benefit to society. The school emphasizes the advantages of flexible monetarism and intervention in trade. NOTE: Keynesians believe that inflation(C) and deflation(C) can be bad for society (deflation being worse) when truly free markets can swing excessively in response to the cycle. Thus intervention to keep the swings within bounds increases the overall gain of an economy.
Inflation(A). Economics term, Austrian school interpretation. An increase in the amount of money. Leads to a general increase in the price of goods and services (assuming all else remains equal) as a supply and demand effect: more dollars chasing the same quantity of goods. Often contrasted and confused with Inflation(C)
Inflation(C). Economics term, Common interpretation. A general increase in the price of goods and services. Sometimes (wrongly, in my opinion) called “Keynesian” inflation as that school of thought willingly adjusts money supply to try and keep inflation within a certain range.
Disinflation. A decrease in the RATE of inflation (both types). Perceived these days in the US as a ‘sputtering of the engine’ as wages and profits and interest all adjust to lower growth rates in compensation.