This discussion reminds me of the Science Life Cycle:
http://languagelog.ldc.upenn.edu/myl/ScienceNewsCycle.gif

Sad, but true.

>> ^Psychologic:
I've never seen Paul or Schiff talk about the inherent deflationary nature of information technologies in the context of Austrian Economics, despite their constant talk of inflation. The price of a given amount of processing power or data storage drops by a fairly consistent percent per year (on average)... the same is true for dna sequencing, solar power, or many other high-tech devices.
Maybe they don't think it's a big deal, but I've never even seen them mention it. Austrian Economics were formulated well before the information age, so I'm curious how these new trends fit into it.


Metal melt values are always a good indicator about inflation over the long history of time. Let us look at penny melt values. This would be a relation of the fiat value of a penny vs the market value of the copper.

http://mises.org/images4/3069figure1.jpg

The worst part of this is that the penny has been changed every so often with less and less copper (other coins as well). Soon, pennies will be filled with steal as that is one of the cheapest metals you can have. After that, it is the end of the line for a penny. What graphs and graphs like this show ( you can look it up for gold, silver, and nearly any other rareish earth metal) and the trend is the same, metal is more highly prized over time than US dollars. This eats away until the system snaps (like back in the currency crunch of 33 when the government outlawed gold...forced you to sell gold so the treasury could have something real to give dollars value after the failed works projects of the 30s.). Fiat currencies and currency under control of central bankers tends to eventually undermine itself. The world is complex and full of players and vested interests and various other things that make prediction along a specific time frame hard. You could have massive investment of a foreign saver nation rescue a monetary system from collapse (IE China to the USA). But when the music stops for debt, the game is up, you have to face the monster your created. And like most things, the longer you wait to fix it, the worse it will be at that time if finally needs mending.

You are also talking about two different ideas. Because tech gets cheaper doesn't mean there isn't inflation. Technology is fairly different from things like, say food, or metal. New processes make something more efficient to produce over its life cycle. Chips become cheaper because of size. The smaller it gets, the cheaper it can be produced and as consequence, more of them can be sold per unit of silicon wafer. If you ever wandered why smaller is better it is because silicon wafers have to be manufactured circular, it is part of the physic's of aligning the silicon molecules properly. However, chips are usually rectangular. This means that you have to throw away all the edge pieces that don't line up to make squares out of the main circle. This doesn't just scale linearly; the smaller you make a chip, the more of the silicon you use.

The same is kind of true of other techs. Hard drives use a similar shrinking so that less can do more. But a building isn't going to use much less material than it did 20 years ago. Also, inflation is really hard to place effectively when you have the government interfering with prices. When you distort prices by government hand out, it is hard to know what the value of something is. Lets take houses for starters. When the government was handing out nearly free money for housing stuff, the market inflated. House prices when up by 50% a year in some areas. This bubble finally burst along with some other bad lone stuff. The prices of homes have fallen dramatically in most areas, but this isn't "deflation", this is a market readjustment.

In other words, the ideas of metals and stuff still apply to tech. Tech is neat in the way that new advancements mean you can do more with less. (same for DNA stuff, as tech gets more advanced, the less you have to play people and computer time to do the same amount of work).

As for their predictions, Shiffs has been saying for years watch out for the bubble burst. He also predicted that the stock and gold values would merge before we saw the end of the stock tumble, which it pretty much did.

global warming is also part of the life cycle of Earth

manufacturing and recycling may have less of an environmental impact than other packaging options, but looking at the entire life cycle of the product you have to realize that there are more stages to the overall life cycle of the product. consider how much more energy is wasted transporting the bottles (full of their product or empty ones to the recycling plant), since they are more fragile and weigh more than their plastic counterpart much more energy goes into transport.

Im not saying it's less environmentally friendly, but people need to look at the big picture instead of saying 'my prius uses less gas than your hummer.'