because as the supply approaches zero, its value goes toward infinity.
But that never happens because goods
exist, which means there is a supply.
I'm talking about supply of currency, not goods or services available for exchange, although they are impacted as well during a debt deflation, as happened leading into the Great Depression, as described by
Irving Fisher in 1933 as nine interlinked factors for cause and effect:
Assuming, accordingly, that, at some point of time, a state of over-indebtedness exists, this will tend to lead to liquidation, through the alarm either of debtors or creditors or both. Then we may deduce the following chain of consequences in nine links:
1) Debt liquidation leads to distress selling and to
2) Contraction of deposit currency, as bank loans are paid off, and to a slowing down of velocity of circulation. This contraction of deposits and of their velocity, precipitated by distress selling, causes
3) A fall in the level of prices, in other words, a swelling of the dollar. Assuming, as above stated, that this fall of prices is not interfered with by reflation or otherwise, there must be
4) A still greater fall in the net worths of business, precipitating bankruptcies and
5) A like fall in profits, which in a "capitalistic," that is, a private-profit society, leads the concerns which are running at a loss to make
6) A reduction in output, in trade and in employment of labor. These losses, bankruptcies and unemployment, lead to
7) pessimism and loss of confidence, which in turn lead to
8) Hoarding and slowing down still more the velocity of circulation.
The above eight changes cause (9) Complicated disturbances in the rates of interest, in particular, a fall in the nominal, or money, rates and a rise in the real, or commodity, rates of interest.
Both hyperinflation and hyperdeflation are strictly monetary phenomena, having little to do with a scarcity or abundance of goods. Shortages of goods under hyper
inflation are not because of a scarcity of goods, but rather a glut - virtually no scarcity -
of the currency. A shortage of money under hyper
deflation also has nothing to do with the supply of goods, but rather an absolutely scarcity of currency with which to buy them.
The problem with the hypothetical is that you didn't account for economic law "... at what price?..."
At what price indeed, the real question is "at what quantity of what"? If there is no currency available to you, it really does not matter what the price is in that currency. You can try to price what you want or need in other things, but with no competing currencies, you're talking barter.
The bigger economic law - the fundamental that most don't take into account, is that a debt-money based economy - an economy where money can only be created as a form of debt - is only viable in a productive, growing economy, with at least moderate inflation required to sustain it. But the economy MUST perpetually expand, taking on ever-increasing (exponentially increasing) amounts of debt to sustain the monetary system, as designed, because it is nothing more than a vast network of inverted pyramids.
All economic goods have a price, and at some price there will be a sale.
Humans require economic goods to live, and at some price there will be a sale.
Again, see above.
Also, I didn't agree with the premise that the primary cause of deflation is tight-fisted people who are hanging onto their money, rubbing their two dimes together, waiting for better prices. That will happen in some areas, but it's incidental. That notion is based on the Keynesian bogeyman called the "Paradox of Thrift", which attempts to make currency holders (read = non-existent savers in our monetary regime) into the primary "liquidity trap" of sorts - the Deflationary Would-Be Monsters who can't be trusted with their own money, because they won't circulate it enough.
Under deflationary contraction, however, nobody even has money to be tight-fisted about. With the currency scarce, most can't even meet the nominal price of their own past and current obligations, let alone have discretionary income to spend. Savings have already been taxed practically out of existence for most in our current highly distorted economy, which encouraged a mass shift to market investments as a mechanism for beating the perpetual inflation required to keep the Ponzi money system afloat.
Therefore, there will always be a buyer and a seller at some price. Your theory of 'hyperdeflation' simply cannot exist.
Again, priced in what, and is it available at any price? Who could get a loan ten years ago? Now, out of those people, how many can get one today?
There is no accepted definition for hyperdeflation, so I think of it loosely as prices falling, rapidly and substantially over a very short period of time (call it a "crash), and primarily as a result of a contraction of the money supply - which in our debt-money regime means contraction of credit, because that is the only way money is created. Using this meaning, hyperdeflation most definitely occurred during the Great Depression, which was a deflationary depression with a period where the money supply contracted rapidly, and prices fell sharply everywhere. Goods and services rapidly hit a floor. Anyone with two dimes to rub together could buy just about anything for a song, but few had two dimes to rub together. That is the nature of a deflation, because credit, and therefore the money supply itself, had contracted/imploded.
Because hyperinflation, and the destruction of the value of money does exist does NOT mean that an opposite -hyperdeflation- must exist.
True. However, while the reality of one does not
necessarily require its opposite, neither does it preclude it. It certainly doesn't have the same dynamics, any more than death by asphyxiation has the same symptoms as death by hypoxia. However rare it is (and it is rare) hyperdeflation has happened in the past, and therefore could happen in the future.
