> Consumer inflation is based on a basket of consumer goods. According to that definition we don't have inflation.

Do you mean something like the Consumer Price Index? If I'm reading this graph [1] correctly, CPI has been increasing at a rate of +1-2% since 2010, and--except for a brief dip below zero during the 2008 financial crisis--at a rate of 2-4% between 2000-2010.

This is consistent with my own experience that the price of groceries / home goods / basic services has increased quite substantially in the past ~15 years.

Doesn't this mean we have consumer inflation after all? Certainly buying power has decreased. Metrics like CPI also do not account for the phenomenon of shrinkflation [2], which may necessitate consumers to buy cheaply-made goods more often when they break or cannot be repaired.

> Imagine a highly simplified economy consisting of one factory. Some initial event happened that caused demand to go down. The factory has trouble selling its inventory. It lowers its prices over time to attract more customers. People looking to buy the latest gadget just put it off because they can buy it later for even less money. At some point the factory has to close because nobody is buying. Then suddenly everyone wants a gadget but there is no factory.

This example seems too simple to be useful. It also seems pretty logically inconsistent, since

* If there is only one factory, all of the consumers must work for that one factory in order to have money to spend on gadgets
* The factory doesn't just poof gadgets into existence -- it must obtain raw materials somehow, either by employing workers or purchasing them from another company.
* Is the gadget a luxury item with no functional value? if so, who's to say that the factory closing is a bad thing?
* If it's not a luxury item, it must serve some functional purpose? If so, that purpose is probably to increase the rate at which gadgets can be made, since there are is literally no other economic activity. So if the factory closes, then no one needs gadgets anymore.

I'm not necessarily saying that you're wrong, just that your example is far from convincing.

> Deflation...makes sure everything you did in the past cannot be topped in the future without extreme effort. It means your best years are already behind you because there is less money to be made in 2021 than in 2020. It tends to reward hoarders, those who don't need to be productive.

Ok, I can see your argument here. I will need to ponder it for a while. However...

> Inflation is the opposite. It makes sure that the future is always brighter than the past. There is more money to be made in 2021 than in 2020. It tends to reward workers, those who do productive work.

...I think it is dangerous to characterize inflation as a good thing. It seems that 1) inflation encourages as much spending as possible today, since your money will have less value tomorrow, 2) inflation discourages working today, since the same effort will earn me more money tomorrow, so why bother?

I guess maybe you can say inflation is abstractly "good for the economy" whatever that means, without reference to the impact on the life satisfaction of real people. But it seems like we should all be able to agree that 0% inflation is the best scenario. I'd be curious to hear an argument for 1% inflation over 0%.

[1] https://www.bls.gov/charts/consumer-price-index/consumer-pri...
[2] https://en.wikipedia.org/wiki/Shrinkflation