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| deflation; some questions | |
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| Tweet Topic Started: Nov 12 2008, 06:11 AM (552 Views) | |
| troubleatiu | Nov 12 2008, 06:11 AM Post #1 |
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Coach
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i hear media pundits talking about a possible deflationary cycle like its something bad. im having a hard time following. the stock market has already given back all the gains it made in the last 5 years, housing prices have crashed, why is it such a bad thing for prices to follow suit? for the average citizen wouldnt this be good? ill use myself as an example. back in july it took over $150/wk to fill my 2 vehicles up. now it costs $75. thats $75/wk i now have to spend on other things i didnt have then. lets say food follows as well. i spend $180-$200/wk feeding a family of 6. if food dropped to $125-$150/wk id have an additional $50/wk to spend on other things. that alone would free up $125/wk. couple that with prices at lowes, walmart, and penneys also going down, the money i have left to spend would go farther there as well. if i was having trouble with my mortgage, that money could be used to stave off falling behind, and so on. why is this portrayed as being so bad? since we import more than we export, deflation/strengthening dollar wouldnt hurt us there either. im lost really. |
![]() "The illegal we do immediately. The unconstitutional takes a little longer."--Henry Kissinger "What luck for rulers that men do not think."- Adolph Hitler "Terrorists don't want your freedoms--they want your life. It's dictators and tyrants who want your freedoms."-author unidentified | |
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| Mr Gray | Nov 12 2008, 07:50 AM Post #2 |
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I haven't heard anyone say that deflation is bad, but if they are, then they are morons. the market is way smarter than the pundits...it always determines the worth vs. buying power of the consumer. |
![]() The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism. | |
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| HoosierLars | Nov 12 2008, 11:06 AM Post #3 |
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3 in a row
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I think the main problem with deflation is it increases consumers' reluctance to buy things, causing prices to fall even further. The cycle could result in another Great Depression. |
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| Unbiased | Nov 12 2008, 11:13 AM Post #4 |
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yep. Deflation is horrid. wages fall, unemployment sky rockets, debt becomes onerous etc so price levels falling is irrelevant because no one has any money to buy anything. the govt has looked deflation square in the eyes and doesn't like what they see - they would rather deal wth the lesser evil in inflation 2 years down the road. keep the treasury printing presses going! |
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| Mr Gray | Nov 12 2008, 01:36 PM Post #5 |
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wrong man...deflation is a necessary market correction...inflaction is typically due to government intervention and ultimately has worse affects. Prices go down, people can afford to make less wages and survive. |
![]() The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism. | |
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| Unbiased | Nov 12 2008, 02:09 PM Post #6 |
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I beg to differ. Go outside and look around. |
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| Mr Gray | Nov 12 2008, 02:15 PM Post #7 |
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I can see. Inflation looks good to the end of your nose....deflation looks good beyond |
![]() The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism. | |
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| Unbiased | Nov 12 2008, 02:26 PM Post #8 |
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I'm telling you right now, the govt has looked at both and would much rather deal with inflation way down the road than deflation right now. the economy was just fine the past few years with an understated inflation rate of 4-5% and $3 gas etc and etc. now we have 1.80 gas and falling, unemployment sky rocketing, consumer consumption DEAD and the economy on the verge of the worst recession in 40 years - yeah deflation looks really good. no disrepect but you need to attend an econ 101 class. |
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| Cattman96 | Nov 12 2008, 02:52 PM Post #9 |
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I am going to have to agree with UB. Deflation is a decline in general price levels, often caused by a reduction in the supply of money or credit. Deflation can also be brought about by direct contractions in spending, either in the form of a reduction in personal spending or investment spending. Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy. |
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The nine scariest words in the english language. " I'm with the government and I'm here to help" - Ronald Reagan "When the people find they can vote themselves money, that will herald the end of the republic." -Benjamin Franklin | |
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| Mr Gray | Nov 12 2008, 03:36 PM Post #10 |
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you guys are crazy. The economy wasn't "good" under high inflation....it was building a bubble. For people who make a living like UB does, inflation seems great because you are able to take short-term financial advantage of hidden weaknesses in the economy before the bubble bursts. Now that it has, prices are restoring to true market value, which is where they should be, and where they would be if we adopted more sound monetary policy (see Old_School). Inflation = artifically increasing the prices of goods & services...what about that seems good? |
![]() The body knows what fighters don't: how to protect itself. A neck can only twist so far. Twist it just a hair more and the body says, "Hey, I'll take it from here because you obviously don't know what you're doing... Lie down now, rest, and we'll talk about this when you regain your senses." It's called the knockout mechanism. | |
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| Cattman96 | Nov 12 2008, 03:40 PM Post #11 |
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I guess I agree more with the deflation not being good as opposed to inflation being good. If the prices of goods go down than the revenue that business are gernerating go down. When that happens I have to believe that what the employers pays their employees will have to go down as well. |
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The nine scariest words in the english language. " I'm with the government and I'm here to help" - Ronald Reagan "When the people find they can vote themselves money, that will herald the end of the republic." -Benjamin Franklin | |
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| Unbiased | Nov 12 2008, 03:45 PM Post #12 |
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go back to your cave. price levels were they deserve to be????????? this entire decade of gains and beyond has been wiped out. you're telling me the economy hasn't grown in 12-15 years? dumb dumb dumb |
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| Unbiased | Nov 12 2008, 03:48 PM Post #13 |
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arron - go ask 300 million americans what they would rather have: moderate inflation, a job, wage growth, ability to feed their family or deflation: out of work, home foreclosed, 1.80 gas for their repossed car....... you are definitely in the deepest of minorities that thinks deflation is a good thing |
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| troubleatiu | Nov 12 2008, 03:48 PM Post #14 |
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im looking from the perspective of the struggling homeowner and the consumer reluctant to spend. some deflation is bound to help these avenues out, isnt it? ive not lost my job yet, and my money is going a little farther. if food and energy costs followed suit, fuck it'd be like getting a raise. less money buys more. im still lost as to how this isnt beneficial. the stock market continues to go down, unemployment continues to rise, home owners continue to default. why shouldn't prices fall somewhat across the board? |
![]() "The illegal we do immediately. The unconstitutional takes a little longer."--Henry Kissinger "What luck for rulers that men do not think."- Adolph Hitler "Terrorists don't want your freedoms--they want your life. It's dictators and tyrants who want your freedoms."-author unidentified | |
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| troubleatiu | Nov 12 2008, 03:53 PM Post #15 |
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deflation isnt a cause of the economic situation. its a symptom. and im sorry ub, i dont think theres been any real growth in 10 years or more with our economy either. ive posted this before; debt is often confused with growth initially. people take on debt, spend the money and things look like theyre going up. but when it comes time to pay the debt and they cant, things fall apart. all the "growth" this decade now appears to have been debt. |
![]() "The illegal we do immediately. The unconstitutional takes a little longer."--Henry Kissinger "What luck for rulers that men do not think."- Adolph Hitler "Terrorists don't want your freedoms--they want your life. It's dictators and tyrants who want your freedoms."-author unidentified | |
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