Consumption cannot be good per se. That would be underwriting the absurd joke in the cartoon above in full. Consumption is good if it is perceived as valuable – by the consumer. Surely that must be true on the arcane macro level as well?

People will never stop consuming even if prices fall. I need to eat. I want a new smart phone. Spurring inflation incentivises a certain kind of spending mainly of the short sighted nature, while disincentivizing other types of spending; mainly of the long sighted nature. Inflation (and deflation) affects the time preference of all actors.

Austrian economics does certainly *not* teach that there is a perfect correlation between expansion of the supply of money and credit on the one hand and general price level on the other. It teaches that new money always enters the marketplace in certain locations depending on how the money is “created”. Sweden again: credits are created in the housing market. This affects prices of houses primarily, after which markets closely related to housing are affected and so on and so forth creating very clear winners and losers. The sooner you get hold of the new money, the more you can buy at yesterday’s prices, simply put. Other forces may well act in contra balance, increases in productivity and innovation will for example have a deflationary effect as we can see in tech. Also: since houses are currently magically appreciating people view their houses as ATMs for all manner of consumption, mortgages are so cheap, affecting all prices in some manner.

Furthermore: Sweden again. Private individuals can never default here. Nearly never I should say. The government will hound you until your dying day to make good on your loan. Corporations not so. Individuals are therefore much more attractive as borrowers, making it very hard for companies to get hold of money, or as I prefer to view it: unused resources.