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deflation; some questions
Tweet Topic Started: Nov 12 2008, 06:11 AM (558 Views)
Mr Gray Nov 12 2008, 09:47 PM Post #16
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Cattman96
Nov 12 2008, 03:40 PM
aaronk2727
Nov 12 2008, 03:36 PM
Cattman96
Nov 12 2008, 02:52 PM
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.
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?
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.
your points are valid, but you must remember that during deflation prices go down, but also means that cost of goods sold decreases, so profits don't decrease to the extent that prices do
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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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Mr Gray Nov 12 2008, 09:48 PM Post #17
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Nov 12 2008, 03:48 PM
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
intelligent people are always in the minority....so thanks for the compliment
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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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Mr Gray Nov 12 2008, 09:51 PM Post #18
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Nov 12 2008, 03:36 PM
Cattman96
Nov 12 2008, 02:52 PM
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.
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?
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
UB, I'm not going to give you years of econ schooling here, but clearly you don't quite understand. You think because the market is down, that all ecomic gains are down? I know that is the world you live in, so you can't always see the forest through the trees, but there is more to the economy than the stock market. And in terms of your comment about the economy "growing"...you are aware that there is and has always been a finite amount of "money" (although it has come in different forms), therefore the economy doesn't really "grow" as you are viewing it. Money changes hands, gets spread around, and becomes worth less, but that isn't growth in economy, that is growth in circulation.
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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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Mr Gray Nov 12 2008, 09:52 PM Post #19
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Nov 12 2008, 03:53 PM
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Nov 12 2008, 03:48 PM
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
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.
thank you trouble...very well put. :cheers:
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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 13 2008, 12:22 AM Post #20
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Nov 12 2008, 09:51 PM
And in terms of your comment about the economy "growing"...you are aware that there is and has always been a finite amount of "money" (although it has come in different forms), therefore the economy doesn't really "grow" as you are viewing it.
Aaron, the US money supply has been growing to roughly match the output and wealth in this country. There has been huge real growth in the past 100 years. Look at how many tens (or hundreds?) of thousands of homes have been built in the last 10-20 years. That is REAL growth anyway you look at it. Boeing's 2007 order book was $171B, and other manufacturers are adding REAL wealth to the US economy. http://www.nytimes.com/2008/01/16/business/16cnd-airbus.html Look at the tens of billions Micro$oft bring in every year, and then multiply them by a hundred.

If the US money supply is grown too fast, the US $ will be devalued.
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Old_School Nov 13 2008, 02:20 AM Post #21
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Enter the obligatory :banghead:

As somebody has already stated, deflation is not the problem, but rather a symptom. A symptom of a problem caused by government intervention in the markets, most egregiously in the form of the Federal Reserve. How anybody can argue in favor of more poison in an attempt to cure the patient is a good idea is beyond me. For the sake of me needing to have been in bed about an hour ago, I'll leave you wonderful cretins with an essay by Lew Rockwell, the president of the Mises Institute. Cattman and Cam, you guys will both definitely want to check this out. I know you both said you wanted to look into more of the Austrian economic theories, what better way to do it than to check out what they have to say about the current situation? Lars and UB, maybe you guys will learn something. On that note, I find it laughable that UB made a quip about Aaron needing to go to an econ. 101 course.

Sorry if it seems as if I'm using this article as a crutch without expressing much of my own thoughts, I'm tired as life and have class in the morning. You guys know I'm good for it though.

http://mises.org/article.aspx?Id=1241

The Blessings of Deflation

Daily Article by Llewellyn H. Rockwell, Jr. | Posted on 5/30/2003


Let's say you set out on a Saturday shopping trip, drive up to the mall, and see a sign that says "50% off everything!" That's great news, right?

Or let's say you are in the market for a new car, and the sticker shock you experience is that cars are cheaper than they used to be. Amazing and wonderful!

Or let's say you are paying for your daughter's college education and find that you have set aside more money than is necessary because the price of tuition and books is lower than you expected. Glory be!

Or let's look at it from the point of view of business. You are a manufacturer and your main expense is steel parts. After many years, even decades, of rising prices for ball bearings and other machine parts, your costs suddenly decline. The cost of replacing assets is dramatically reduced. That leaves more for investment, marketing, paying employees, and enticing investors with dividends. It is a win-win situation for everyone.

So far, "deflation" seems like a glorious thing. But wait, says conventional wisdom. Consumers and businesses may benefit, sure, but what about sellers? They always desire the highest price possible for their products. If Dell had its way, every computer would cost $1 million, and they would certainly charge that if they could sell the same number of computers at this price as versus $1 thousand. By the same token, consumers want to pay exactly $0 for what they buy. It is the interplay between these two ideal worlds that yields the market price.

If businesses have been required by virtue of competitive pressure to sell at ever lower prices, how can they make a buck? By becoming more efficient. Anyone who has ever worked in a business knows that efficiency is something that businesses do when they have to. A monopolist is facing no competition (think of a government toll road) and so can charge high prices and maintain awful inefficiencies year after year. A business in a competitive environment cannot.

The computer industry itself provides the best illustration. Prices have plummeted even as sales have soared. Computer makers and retailers have profited handsomely. And this is not a unique case. The same has happened to appliances, which have gone down in price dramatically over the years even as sales have risen higher and higher. Why? Because the companies have gotten better and better at doing what they do, and have thereby been able to make profits even in the face of continual price declines.

Thus we see that there is no radical disconnect between the interest of consumers (who always want lower prices) and overall economic health. What's good for consumers is good for everyone. You can only marvel at the many economists and commentators who try to convince the public that deflation is a very scary thing. In doing so, they enjoy the cachet associated with generating a counterintuitive conclusion, but in this case, it is simply wrong. The first intuition that bargains are a great thing is precisely the right one. In discerning economic theory, sometimes common sense turns out to be all you need.

And yet, many experts still say we should "worry about falling prices" because they represent a "destructive force" (according to Martin Wolk at MSNBC, for example). He explains as follows: "As prices keep going down, money grows more valuable. . . ." So far so good!

But he goes on to say that this is actually a bad thing because it creates "an enormous disincentive for consumers and businesses to spend money. Economic activity slows, unemployment rises and demand continues to decline." Well, but that presumes that consumers have something to gain by forever stocking up on dollars and never buying anything, which is absurd. It's true that falling prices create incentives to save, but so long as the preference of consumers is to save instead of spend, that can only prepare the way for a future of economic growth. Consumers save for a reason, namely, to spend later.

Wolk's next point concerns the implications of deflation for debt. Deflation makes it "far more difficult to pay back existing loans." It's true that loans are paid back in dollars that are more valuable than the ones borrowed. But that is part of the risk one takes when deciding to borrow in the first place. If we all had perfect foresight, our behavior would change substantially. But that is no case for pressing the pause button on economic affairs. What deflation does is provide a disincentive to borrow and an incentive to use current savings for purposes of investment. It means a reward for well-capitalized companies and individuals—a good thing all around.

Now we get to the crux of the matter: the Great Depression. The assumption is that falling prices somehow caused the economy to crumble. In fact, it was the after-effects of the boom combined with massive government intervention that caused the depression. The only silver lining in the entire period of the 1930s was precisely the falling prices that made the dollar count for more. Falling prices (a falling cost of living) are what Murray Rothbard has described as the "great advantage" of recessions. If you can imagine the Great Depression without falling prices, you have conjured up an image that is far worse than the reality.

Ask yourself whether during economic downturns, you want your money to grow or shrink in value? If your future job security is in doubt, do you want to pay more or less for goods? If your savings are meager, do you want them to have more or less purchasing power in the future? If you answer these questions rationally, you can see that deflation is wonderful for everyone, and the saving grace of a period of economic contraction. Throughout the 19th century, prices fell in periods of economic growth, which is precisely what one might expect. This is all to the good.

As Rothbard has said, "rather than a problem to be dreaded and combatted, falling prices through increased production is a wonderful long-run tendency of untrammelled capitalism. The trend of the Industrial Revolution in the West was falling prices, which spread an increased standard of living to every person; falling costs, which maintained general profitability of business; and stable monetary wage rates—which reflected steadily increasing real wages in terms of purchasing power. This is a process to be hailed and welcomed rather than to be stamped out."

If we must have recessions, make them deflationary recessions. What's far worse is the phenomenon of the inflationary recession that Keynesians are always trying to foist upon us. For the same reason that deflation is a good thing, rising prices during a recession are the worst possible thing, because they provide a disincentive to save and invest for the future. They encourage present consumption and thereby gut the capital base necessary for future growth. They prolong suffering in every way.

Thus can we see that the widely-approved prescription to prevent deflation, namely inflation, is the worst possible path. But this is precisely what the Fed has endorsed as a matter of policy. It is hardly surprising that the central planners managing our lives would adopt the exact policy that will make us so much worse off.

Fortunately, the free market contains mechanisms that can work around attempts by the Fed to inflate. It could be that the banks have a hard time foisting new money on people and instead work to protect their balance sheets. Businesses too, stung by economic contraction, might avoid going further into debt, no matter how cheaply they may be able to borrow. In this case, prices could fall whether the Fed wants them to or not.

In economics, it is a good rule that what is good for individuals and families is also good for the economy. Everyone wants a bargain, which is to say a low price. Sadly, in our present age of inflation, lower prices mostly affect specific products and sectors. May the joy we take in falling prices for electronics be expanded to anything and everything we buy. Let the commentators fret and worry about what their fallacious macroeconomic models tell them. The rest of us can sit back and watch our standard of living rise and rise.

Sadly, I doubt we will see any deflation. Even based on the last ten years of data, overall price increases are still the norm.

In fact, since 1913 and the founding of the Fed, the dollar has lost 95 percent of its value. It is far more likely that this robbery will continue rather than for our lost purchasing power to be restored to its rightful owners: you and me.
The poster formerly known as mybracketownsyou.
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troubleatiu Nov 13 2008, 05:58 AM Post #22
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good article, old school. again, from my perspective... i work for usg corp, which makes home building materials, namely wallboard. we started feeling the brunt of the economic situation 2 years ago. and yet, over that 2 year period, we have had a price increase roughly every 4 monthes. 6 price increases when business has been rather awful. im just a mid-level manager, decisions like this are made out of the corporate office in chicago. my input has always been, "if we cant sell this at $4.50/sheet what makes you think we can sell it at $4.75/sheet? or $5.00? how about $5.50?" and you know what? business tanks even more after the price increase. doesnt simple supply and demand state that if demand is down, price also follows? what ive personally seen through these 2 years and numerous price hikes is each successive quarter we've lost more money than the last.
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Unbiased Nov 13 2008, 08:54 AM Post #23
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Nov 12 2008, 09:51 PM
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Nov 12 2008, 03:45 PM
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Nov 12 2008, 03:36 PM
Cattman96
Nov 12 2008, 02:52 PM
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.
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?
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
UB, I'm not going to give you years of econ schooling here, but clearly you don't quite understand. You think because the market is down, that all ecomic gains are down? I know that is the world you live in, so you can't always see the forest through the trees, but there is more to the economy than the stock market. And in terms of your comment about the economy "growing"...you are aware that there is and has always been a finite amount of "money" (although it has come in different forms), therefore the economy doesn't really "grow" as you are viewing it. Money changes hands, gets spread around, and becomes worth less, but that isn't growth in economy, that is growth in circulation.
we shall see. go ask retirees and those near retirement how good deflation feels to them as they are scared shitless as their net worths have been halved with no way of improving it.


unless this stimulus works - the US is going to become a shanty town. and you deflationary lovers will get a harse dose of reality.
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Cattman96 Nov 13 2008, 09:27 AM Post #24
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Nov 13 2008, 02:20 AM
Enter the obligatory :banghead:

As somebody has already stated, deflation is not the problem, but rather a symptom. A symptom of a problem caused by government intervention in the markets, most egregiously in the form of the Federal Reserve. How anybody can argue in favor of more poison in an attempt to cure the patient is a good idea is beyond me. For the sake of me needing to have been in bed about an hour ago, I'll leave you wonderful cretins with an essay by Lew Rockwell, the president of the Mises Institute. Cattman and Cam, you guys will both definitely want to check this out. I know you both said you wanted to look into more of the Austrian economic theories, what better way to do it than to check out what they have to say about the current situation? Lars and UB, maybe you guys will learn something. On that note, I find it laughable that UB made a quip about Aaron needing to go to an econ. 101 course.

Sorry if it seems as if I'm using this article as a crutch without expressing much of my own thoughts, I'm tired as life and have class in the morning. You guys know I'm good for it though.

http://mises.org/article.aspx?Id=1241

The Blessings of Deflation

Daily Article by Llewellyn H. Rockwell, Jr. | Posted on 5/30/2003


Let's say you set out on a Saturday shopping trip, drive up to the mall, and see a sign that says "50% off everything!" That's great news, right?

Or let's say you are in the market for a new car, and the sticker shock you experience is that cars are cheaper than they used to be. Amazing and wonderful!

Or let's say you are paying for your daughter's college education and find that you have set aside more money than is necessary because the price of tuition and books is lower than you expected. Glory be!

Or let's look at it from the point of view of business. You are a manufacturer and your main expense is steel parts. After many years, even decades, of rising prices for ball bearings and other machine parts, your costs suddenly decline. The cost of replacing assets is dramatically reduced. That leaves more for investment, marketing, paying employees, and enticing investors with dividends. It is a win-win situation for everyone.

So far, "deflation" seems like a glorious thing. But wait, says conventional wisdom. Consumers and businesses may benefit, sure, but what about sellers? They always desire the highest price possible for their products. If Dell had its way, every computer would cost $1 million, and they would certainly charge that if they could sell the same number of computers at this price as versus $1 thousand. By the same token, consumers want to pay exactly $0 for what they buy. It is the interplay between these two ideal worlds that yields the market price.

If businesses have been required by virtue of competitive pressure to sell at ever lower prices, how can they make a buck? By becoming more efficient. Anyone who has ever worked in a business knows that efficiency is something that businesses do when they have to. A monopolist is facing no competition (think of a government toll road) and so can charge high prices and maintain awful inefficiencies year after year. A business in a competitive environment cannot.

The computer industry itself provides the best illustration. Prices have plummeted even as sales have soared. Computer makers and retailers have profited handsomely. And this is not a unique case. The same has happened to appliances, which have gone down in price dramatically over the years even as sales have risen higher and higher. Why? Because the companies have gotten better and better at doing what they do, and have thereby been able to make profits even in the face of continual price declines.

Thus we see that there is no radical disconnect between the interest of consumers (who always want lower prices) and overall economic health. What's good for consumers is good for everyone. You can only marvel at the many economists and commentators who try to convince the public that deflation is a very scary thing. In doing so, they enjoy the cachet associated with generating a counterintuitive conclusion, but in this case, it is simply wrong. The first intuition that bargains are a great thing is precisely the right one. In discerning economic theory, sometimes common sense turns out to be all you need.

And yet, many experts still say we should "worry about falling prices" because they represent a "destructive force" (according to Martin Wolk at MSNBC, for example). He explains as follows: "As prices keep going down, money grows more valuable. . . ." So far so good!

But he goes on to say that this is actually a bad thing because it creates "an enormous disincentive for consumers and businesses to spend money. Economic activity slows, unemployment rises and demand continues to decline." Well, but that presumes that consumers have something to gain by forever stocking up on dollars and never buying anything, which is absurd. It's true that falling prices create incentives to save, but so long as the preference of consumers is to save instead of spend, that can only prepare the way for a future of economic growth. Consumers save for a reason, namely, to spend later.

Wolk's next point concerns the implications of deflation for debt. Deflation makes it "far more difficult to pay back existing loans." It's true that loans are paid back in dollars that are more valuable than the ones borrowed. But that is part of the risk one takes when deciding to borrow in the first place. If we all had perfect foresight, our behavior would change substantially. But that is no case for pressing the pause button on economic affairs. What deflation does is provide a disincentive to borrow and an incentive to use current savings for purposes of investment. It means a reward for well-capitalized companies and individuals—a good thing all around.

Now we get to the crux of the matter: the Great Depression. The assumption is that falling prices somehow caused the economy to crumble. In fact, it was the after-effects of the boom combined with massive government intervention that caused the depression. The only silver lining in the entire period of the 1930s was precisely the falling prices that made the dollar count for more. Falling prices (a falling cost of living) are what Murray Rothbard has described as the "great advantage" of recessions. If you can imagine the Great Depression without falling prices, you have conjured up an image that is far worse than the reality.

Ask yourself whether during economic downturns, you want your money to grow or shrink in value? If your future job security is in doubt, do you want to pay more or less for goods? If your savings are meager, do you want them to have more or less purchasing power in the future? If you answer these questions rationally, you can see that deflation is wonderful for everyone, and the saving grace of a period of economic contraction. Throughout the 19th century, prices fell in periods of economic growth, which is precisely what one might expect. This is all to the good.

As Rothbard has said, "rather than a problem to be dreaded and combatted, falling prices through increased production is a wonderful long-run tendency of untrammelled capitalism. The trend of the Industrial Revolution in the West was falling prices, which spread an increased standard of living to every person; falling costs, which maintained general profitability of business; and stable monetary wage rates—which reflected steadily increasing real wages in terms of purchasing power. This is a process to be hailed and welcomed rather than to be stamped out."

If we must have recessions, make them deflationary recessions. What's far worse is the phenomenon of the inflationary recession that Keynesians are always trying to foist upon us. For the same reason that deflation is a good thing, rising prices during a recession are the worst possible thing, because they provide a disincentive to save and invest for the future. They encourage present consumption and thereby gut the capital base necessary for future growth. They prolong suffering in every way.

Thus can we see that the widely-approved prescription to prevent deflation, namely inflation, is the worst possible path. But this is precisely what the Fed has endorsed as a matter of policy. It is hardly surprising that the central planners managing our lives would adopt the exact policy that will make us so much worse off.

Fortunately, the free market contains mechanisms that can work around attempts by the Fed to inflate. It could be that the banks have a hard time foisting new money on people and instead work to protect their balance sheets. Businesses too, stung by economic contraction, might avoid going further into debt, no matter how cheaply they may be able to borrow. In this case, prices could fall whether the Fed wants them to or not.

In economics, it is a good rule that what is good for individuals and families is also good for the economy. Everyone wants a bargain, which is to say a low price. Sadly, in our present age of inflation, lower prices mostly affect specific products and sectors. May the joy we take in falling prices for electronics be expanded to anything and everything we buy. Let the commentators fret and worry about what their fallacious macroeconomic models tell them. The rest of us can sit back and watch our standard of living rise and rise.

Sadly, I doubt we will see any deflation. Even based on the last ten years of data, overall price increases are still the norm.

In fact, since 1913 and the founding of the Fed, the dollar has lost 95 percent of its value. It is far more likely that this robbery will continue rather than for our lost purchasing power to be restored to its rightful owners: you and me.
With a risk of sounding like a disciple that makes sense to me. I need to get back to more reading on the Von Mises, I have just finished the Fairtax book. Freaking scrambled brains at this point.
Edited by Cattman96, Nov 13 2008, 10:03 AM.
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Mr Gray Nov 13 2008, 11:52 AM Post #25
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Nov 13 2008, 12:22 AM
aaronk2727
Nov 12 2008, 09:51 PM
And in terms of your comment about the economy "growing"...you are aware that there is and has always been a finite amount of "money" (although it has come in different forms), therefore the economy doesn't really "grow" as you are viewing it.
Aaron, the US money supply has been growing to roughly match the output and wealth in this country. There has been huge real growth in the past 100 years. Look at how many tens (or hundreds?) of thousands of homes have been built in the last 10-20 years. That is REAL growth anyway you look at it. Boeing's 2007 order book was $171B, and other manufacturers are adding REAL wealth to the US economy. http://www.nytimes.com/2008/01/16/business/16cnd-airbus.html Look at the tens of billions Micro$oft bring in every year, and then multiply them by a hundred.

If the US money supply is grown too fast, the US $ will be devalued.
Lars...wealth isn't "created"....it merely changes hands and forms. When Boeing builds $171B worth of product, that isn't "new" money, it is just existing money being transferred to them & spread to their employees, investors...etc etc. That money had to come from somewhere to begin with.....it doesn't just "appear" in the form of new airplanes. You need look no further than the history of the commidities market to see what I mean. You can basically buy the exact same amount of land or gas today with an ounce of gold that you could have in 1900.....wealth hasn't been created, the economy has only been inflated due to increased circulation.
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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 13 2008, 12:36 PM Post #26
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Nov 13 2008, 11:52 AM
HoosierLars
Nov 13 2008, 12:22 AM
aaronk2727
Nov 12 2008, 09:51 PM
And in terms of your comment about the economy "growing"...you are aware that there is and has always been a finite amount of "money" (although it has come in different forms), therefore the economy doesn't really "grow" as you are viewing it.
Aaron, the US money supply has been growing to roughly match the output and wealth in this country. There has been huge real growth in the past 100 years. Look at how many tens (or hundreds?) of thousands of homes have been built in the last 10-20 years. That is REAL growth anyway you look at it. Boeing's 2007 order book was $171B, and other manufacturers are adding REAL wealth to the US economy. http://www.nytimes.com/2008/01/16/business/16cnd-airbus.html Look at the tens of billions Micro$oft bring in every year, and then multiply them by a hundred.

If the US money supply is grown too fast, the US $ will be devalued.
Lars...wealth isn't "created"....it merely changes hands and forms.
You're 100% wrong here, Aaron. This sounds like the liberal argument for why wealth redistribution is required, and you can't grow the pie. Conservatives believe that the correct policies result in true economic growth, and a rising tide lifts all boats.

Sorry if I totally misinterpreted your meaning here...
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Mr Gray Nov 13 2008, 12:50 PM Post #27
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Nov 13 2008, 12:36 PM
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Nov 13 2008, 11:52 AM
HoosierLars
Nov 13 2008, 12:22 AM
aaronk2727
Nov 12 2008, 09:51 PM
And in terms of your comment about the economy "growing"...you are aware that there is and has always been a finite amount of "money" (although it has come in different forms), therefore the economy doesn't really "grow" as you are viewing it.
Aaron, the US money supply has been growing to roughly match the output and wealth in this country. There has been huge real growth in the past 100 years. Look at how many tens (or hundreds?) of thousands of homes have been built in the last 10-20 years. That is REAL growth anyway you look at it. Boeing's 2007 order book was $171B, and other manufacturers are adding REAL wealth to the US economy. http://www.nytimes.com/2008/01/16/business/16cnd-airbus.html Look at the tens of billions Micro$oft bring in every year, and then multiply them by a hundred.

If the US money supply is grown too fast, the US $ will be devalued.
Lars...wealth isn't "created"....it merely changes hands and forms.
You're 100% wrong here, Aaron. This sounds like the liberal argument for why wealth redistribution is required, and you can't grow the pie. Conservatives believe that the correct policies result in true economic growth, and a rising tide lifts all boats.

Sorry if I totally misinterpreted your meaning here...
Lars, redistribution through free-market capitalism is the key. Redistribution through government force, increased taxation, and increased circulation (which equals our nationsl largest hidden tax = inflation) is the problem. When the rich share their wealth by hiring people and purchasing products, that is free-market redistribution.
Posted Image
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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eelbor Nov 13 2008, 12:56 PM Post #28
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So, if the piece of tourmaline rough I paid roughly $40 dollars for and sawing a few bits of it off and polishing a few windows in it making it wortha few hundred is not creating wealth, I am lost here.
Before
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After
Posted Image

Where did the new value come from?
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"Liberal, shmiberal. That should be a new word. Shmiberal: one who is assumed liberal, just because he's a professional whiner in the newspaper. If you'll read the subtext for many of those old strips, you'll find the heart of an old-fashioned Libertarian. And I'd be a Libertarian, if they weren't all a bunch of tax-dodging professional whiners." - Berkeley Breathed


Meat is Murder. Sweet, delicious murder.
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HoosierLars Nov 13 2008, 01:56 PM Post #29
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Right, Eel, according to Aaron, no wealth could have been created. And when Intel takes some sand and turns it into a Pentium, there's no increase in wealth there either. Clear?

I'm not sure about gold mining, but according to Aaron's logic, I guess no wealth is created because the gold was already buried in the ground in the first place. And I don't even want to get into precious metals/minerals that weren't even discovered back in the good old days when gold was the "standard" for wealth and value.
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Mr Gray Nov 13 2008, 02:34 PM Post #30
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Nov 13 2008, 01:56 PM
Right, Eel, according to Aaron, no wealth could have been created. And when Intel takes some sand and turns it into a Pentium, there's no increase in wealth there either. Clear?

I'm not sure about gold mining, but according to Aaron's logic, I guess no wealth is created because the gold was already buried in the ground in the first place. And I don't even want to get into precious metals/minerals that weren't even discovered back in the good old days when gold was the "standard" for wealth and value.
:banghead: :banghead: :banghead: :banghead:
Posted Image
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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