It's a official now. Japan in a recession.

[fskimospy]

I would strongly suggest that you familiarize yourself with basic concepts such as economic calculation and miscalculation, “the pricing process”, prices as essential information, heterogeneous capital (and goods and services), voluntary exchange, violent intervention and the Great Depression as the result of a hangover from central bank shenanigans in WWI.

Your main points have been eviscerated so many times by people who understand basic economics.

Nope, they sure haven't. I've got a perfectly good handle on basic economics. Certainly one good enough that I would never try to say something like 'consumption makes the economy shrink'. That statement alone tells me that you have no understanding of basic economics.

So again, can I ask where you got these ideas from? My guess is no economics program taught in the United States.

 

[mf0611]

Nope, they sure haven't. I've got a perfectly good handle on basic economics. Certainly one good enough that I would never try to say something like 'consumption makes the economy shrink'. That statement alone tells me that you have no understanding of basic economics.

So again, can I ask where you got these ideas from? My guess is no economics program taught in the United States.

If you understood basic economics, then you would not have said what you said above, and you would have understood that consumption shrinks economies.

Where do I get my ideas from? From centuries of economic thought. I understand the patterns and threads of economic thought over very long periods of time, so I have a heightened ability to identify flawed arguments when they are made. I am not exaggerating when I say that most of what people like you and other noobs “contribute” to economic discourse, is regurgitated fallacies that people many many years ago have also believed.

You may not get this yet, but your core beliefs about yourself, about human life, about the universe, are ideas you have adopted without rational criticism, but rather accepted it because you believe you had to believe it.

These are the core fundamentals of thought that can often lead people astray, until they get to false conclusions like consumption grows economies. I bet you have no idea of the history behind that thought, how it came about, what and who were the main influences of the people who developed that doctrine, and how the influential people came to believe in the principles that were then adopted by others.

You clearly don’t respect human thought enough to give it the attention it requires in order to make much better arguments than what you are making.

You have not even explained exactly how gradually falling prices is necessarily bad. You just said people delay their spending. That is it. You have a one liner and you seriously believe you have what it takes to stand tow to toe with people who understand basic economics? You will continually get creamed that way. We are your intellectual superiors. At least until you read the literature on that which you are criticizing here. You sound like you want to prove to yourself you didn’t waste all that money on a useless education.

I did not claim that consumption is a negative thing. Knowing and stating that consumption shrinks economies is not a pejorative or negative comment about consumption. You are conflating facts with value judgments.

Consumption is necessary for human life and happiness. But that does not imply that consumption does not shrink economies.

That consumption shrinks economies, contrary to your claim, is based on economic theory. Just because you are not aware of it, it doesn’t mean it doesn’t exist. You don’t have enough knowledge to use your own knowledge as a proxy for what knowledge exists out there. You are using a very poor judgment.

 

[mf0611]

I would strongly suggest you read the academic literature on the difference between modest, sustained inflation and modest, sustained deflation. They are not remotely similar.

And no, it's pretty much universally agreed that deflation is bad. The only people who even try to dispute that are Austrian economics, but that's not a school of economics that's taken seriously. (it being scared of math and all) Additionally, whether a period of inflation or deflation is good or bad is not dependent on whether or not it is market driven. What matters is its effects on the economy. ie: it's the outcome that matters, not the source.

I would strongly suggest you familiarize yourself with the argumentative fallacy called fallacy of authority and fallacy of ad populum. You cannot prove an argument correct with the premise that most people believe in it, nor can you do so by the fact that most schools of economic thought believe it.

I would also strongly suggest you read market monetarist literature, because market monetarists recognize that modest gradual price deflation founded on modest gradual productivity growth is not a bad thing, and that fears over price deflation regardless of the causes, is an unfounded irrational fear. Most schools of economic thought are actually wrong about price deflation. Most have come to believe that because falling prices has been temporally correlated with depressions and recessions, that all price declines are bad. Economists who understand economics better have explained in great detail that productivity based price deflation does not increase unemployment nor does it put any downward pressure on profitability.

To your point about gradually falling prices leading to “delays in consuming”…

Yes, a gradual price deflation of say 2% might very well lead to consumers “delaying” their consumer spending. But you have to expand your range of cognition. Things don’t stop there. You have to keep asking and probing. Suppose people did delay their consumer spending. Can they keep delaying and delaying forever? Clearly not. But because people don’t all have same frequency of making consumer expenditures all on the same days and weeks, it is not like there will be a period of no spending at all anywhere, and then spending, leading to bankruptcies in the interim.

No, what happens when there is gradual price deflation is that people might end up holding a slightly higher cash balance, say 10% more, relative to the value of their accumulated assets. Once that new cash preference tendency levels out (ceteris paribus), then there is no more reason or need or incentive to keep increasing cash balances ad infinitum.

To my other point, just like gradual price inflation does not lead to continually falling cash balances as infinitum, neither would gradual price deflation lead to continually rising cash balances.

There is no destructive effects on economic activity when prices fall because of productivity growth. We see this in electronics. Prices gradually fall over time, because the rate of productivity growth is so high that not even central banks targeting price level inflation of 2% can overcome that productivity growth. So we see prices falling. But are people forever “delaying” their electronics purchases? Certainly not! In fact, have you seen the lineups for new electronic gizmos like iPhones and such? Prices keep falling for all kinds of electronics, and yet people bite the bullet and would rather have the goods NOW at the higher price relative to LATER when the prices are even lower.

It's been explained to you the concept of time preference, which is the main principle underlying why people spend in the present even if they believe prices will fall next year. Yet you scoffed at it very pretentiously. You clearly don’t have a very sophisticated understanding of economics. You falsely believe that to become enlightened in economics is to merely follow the crowds, the mainstream. That is what makes people like me more intelligent than you. We don’t conflate following the crowds with the pinnacle of economic knowledge. We know that the mainstream fears price deflation because the theory is incapable of distinguishing between good price deflation caused by productivity growth, which does not occur in the aggregate in our inflationary society, with bad price deflation caused by monetary deflation which has historically, empirically, visually been correlated with depressions in our central banking society.

The mainstream tries to copy physicists, and because of that, lacks sufficient means to use counter-factual analysis.

I should stop recommending any more literature to you however, because you appear to not be the type that “wastes his time” spending valuable brain cells on anything but how to stay with the popular beliefs of the time, in order to gain the approval he was taught can only be had by believing what is popular.

 

[mf0611]

Good thing home prices are rising, or else we would all delay buying houses until we died from the elements.

Good thing clothing prices are rising, or else we would all be walking around in the nude.

Good thing medicine prices are rising, or else we would all choose having horrible symptoms and pain.

Good thing energy prices are rising, or else we would all be using Flintstone cars.

People like eskimospy are amusing to have around. He provides fodder for entertainment.

 

[fskimospy]

Good thing home prices are rising, or else we would all delay buying houses until we died from the elements.

Good thing clothing prices are rising, or else we would all be walking around in the nude.

Good thing medicine prices are rising, or else we would all choose having horrible symptoms and pain.

Good thing energy prices are rising, or else we would all be using Flintstone cars.

People like eskimospy are amusing to have around. He provides fodder for entertainment.

This is pathetic. Deflation doesn't mean people never buy anything ever, it means there is a disincentive, which is a bad thing. It also increases the real value of debt and discourages investment.

This is basic macroeconomics. It is amusing to hear someone who thinks that consumption shrinks the economy try to attack others for their lack of knowledge though.

 

[fskimospy]

I would strongly suggest you familiarize yourself with the argumentative fallacy called fallacy of authority and fallacy of ad populum. You cannot prove an argument correct with the premise that most people believe in it, nor can you do so by the fact that most schools of economic thought believe it.

Oh jesus, not this shit again. Of course you can't prove an economic theory right based on who believes it. Considering that this forum isn't an academic economics journal, however, people generally tend to use the findings and opinions of recognized experts in the field as evidence for their position.

You've said a number of things so far that are unsupportable either theoretically or in the evidence. ie: they have failed really basic elements of a coherent argument. This made me think it was highly likely that you've never taken an economics class in your life, otherwise you wouldn't be saying such silly things. Hence, my question about where you got these ideas in your head.

I would also strongly suggest you read market monetarist literature, because market monetarists recognize that modest gradual price deflation founded on modest gradual productivity growth is not a bad thing, and that fears over price deflation regardless of the causes, is an unfounded irrational fear. Most schools of economic thought are actually wrong about price deflation. Most have come to believe that because falling prices has been temporally correlated with depressions and recessions, that all price declines are bad. Economists who understand economics better have explained in great detail that productivity based price deflation does not increase unemployment nor does it put any downward pressure on profitability.

Actually almost no economist believes that all price declines are bad, and productivity based deflations are an example of that. If you had a better understanding of economics and the literature you would know that and wouldn't be trying to create a straw man here either intentionally or unintentionally.

To your point about gradually falling prices leading to “delays in consuming”…

Yes, a gradual price deflation of say 2% might very well lead to consumers “delaying” their consumer spending. But you have to expand your range of cognition. Things don’t stop there. You have to keep asking and probing. Suppose people did delay their consumer spending. Can they keep delaying and delaying forever? Clearly not. But because people don’t all have same frequency of making consumer expenditures all on the same days and weeks, it is not like there will be a period of no spending at all anywhere, and then spending, leading to bankruptcies in the interim.

This is the mix between a straw man and simply another non-sequitur. Nobody says that deflation leads to nobody buying anything. That in no way changes the fact that deflation is in most cases really, really bad.

No, what happens when there is gradual price deflation is that people might end up holding a slightly higher cash balance, say 10% more, relative to the value of their accumulated assets. Once that new cash preference tendency levels out (ceteris paribus), then there is no more reason or need or incentive to keep increasing cash balances ad infinitum.

To my other point, just like gradual price inflation does not lead to continually falling cash balances as infinitum, neither would gradual price deflation lead to continually rising cash balances.

A third straw man. Nobody thinks that deflation means that eventually everyone just sits on a pile of their own money and never buys anything. Why do you keep doing this?

There is no destructive effects on economic activity when prices fall because of productivity growth. We see this in electronics. Prices gradually fall over time, because the rate of productivity growth is so high that not even central banks targeting price level inflation of 2% can overcome that productivity growth. So we see prices falling. But are people forever “delaying” their electronics purchases? Certainly not! In fact, have you seen the lineups for new electronic gizmos like iPhones and such? Prices keep falling for all kinds of electronics, and yet people bite the bullet and would rather have the goods NOW at the higher price relative to LATER when the prices are even lower.

You're taking one specific sector of the economy and trying to generalize it. That's a big no-no.

It's been explained to you the concept of time preference, which is the main principle underlying why people spend in the present even if they believe prices will fall next year. Yet you scoffed at it very pretentiously. You clearly don’t have a very sophisticated understanding of economics. You falsely believe that to become enlightened in economics is to merely follow the crowds, the mainstream. That is what makes people like me more intelligent than you. We don’t conflate following the crowds with the pinnacle of economic knowledge. We know that the mainstream fears price deflation because the theory is incapable of distinguishing between good price deflation caused by productivity growth, which does not occur in the aggregate in our inflationary society, with bad price deflation caused by monetary deflation which has historically, empirically, visually been correlated with depressions in our central banking society.

The mainstream tries to copy physicists, and because of that, lacks sufficient means to use counter-factual analysis.

I should stop recommending any more literature to you however, because you appear to not be the type that “wastes his time” spending valuable brain cells on anything but how to stay with the popular beliefs of the time, in order to gain the approval he was taught can only be had by believing what is popular.

Yes, I'm sure when you say things like 'consumption shrinks the economy' it's not that you don't know what you're talking about, it's that you have special, secret knowledge that all the sheeple just don't understand because they're too dumb.

 

[inachu]

Dude, this is basic economics. Why do you so stubbornly refuse to learn?

Deflation is catastrophic because it incentivizes not engaging in commerce. If I can buy ten widgets today for $10 and buy 12 widgets for $10 in a little while, it makes sense to wait. The thing is that it then starts making sense for everyone to wait before engaging in commerce. Since your spending is my income and vice versa, now we're both going broke because nobody is buying anything... so we cut prices further, causing even more deflation.

If you believe deflation is a good thing please provide some evidence to support this from an authoritative source.

But the fact that the price has not gone down but has stayed the same even though the valuation of the yen is being flushed to the point like zimbabwe.

What good can come from that?

Perhaps they want to keep it high so they do not get nasty tourists?

4 years ago buying Sushi at the Tokyo airport using USA dollars for just one helping(6 rolls) for california roll was at $40.

The economics of Japan do not make sense.

 

[alkemyst]

Please, do tell. What is the us dollar backed by? The full faith of the federal reserve?

Instead of printing money the government should be focused on ending free trade and bringing our jobs back. It is either end free trade and restore our manufacturing sector, or continue to print money.

You want an instant overnight recovery, tell google, apple, dell, acer,,,, everyone who makes tech toys, if you want to sell here you have to make here.

Japans problem is they have been outsourcing just like we have.

Actually you are taken by the shell game. All countries have to do is print money.

The US had the best currency for a long time. They didn't use that for the people.

 

[mf0611]

This is pathetic. Deflation doesn't mean people never buy anything ever, it means there is a disincentive, which is a bad thing. It also increases the real value of debt and discourages investment.

This is basic macroeconomics. It is amusing to hear someone who thinks that consumption shrinks the economy try to attack others for their lack of knowledge though.

Where ya going with those goalposts?

You stated:
“Deflation is catastrophic because it incentivizes not engaging in commerce”

If not incentives, then by what miracle do you suggest people have succumbed to the act of consuming products and services produced from the technology sector that have gradually decreased in price over time?

 

[fskimospy]

Where ya going with those goalposts?

You stated:
“Deflation is catastrophic because it incentivizes not engaging in commerce”

If not incentives, then by what miracle do you suggest people have succumbed to the act of consuming products and services produced from the technology sector that have gradually decreased in price over time?

You do not understand what 'moving the goalposts' is.

I stand by exactly what I stated. I was unaware that providing an incentive (or disincentive) for some economic activity would mean that such an activity must either ramp to infinity or stop altogether. This must be located in those special youtube videos you got the rest of your economics understanding from.

Productivity related deflation was already covered and is not generally applicable to entire economies for reasons that should be obvious.

 

[mf0611]

But the fact that the price has not gone down but has stayed the same even though the valuation of the yen is being flushed to the point like zimbabwe.

What good can come from that?

Perhaps they want to keep it high so they do not get nasty tourists?

4 years ago buying Sushi at the Tokyo airport using USA dollars for just one helping(6 rolls) for california roll was at $40.

The economics of Japan do not make sense.

Keynesians like eskimospy believe in sticky prices, which is why they advocate for a central bank to continually inflate the money supply or else prices will keep falling in a free market.

 

[mf0611]

The argument that falling prices is good or bad, in general, is misguided, in that price movements are mere signals. Falling prices due to a fire sale of assets out of necessity to raise cash due to poor investment decisions toward products that consumers do not want is not desirable. Falling prices due to technological advancement lowering the production costs of goods in a competitive environment is quite desirable.

 

[ElFenix]

The only people who even try to dispute that are Austrian economics, but that's not a school of economics that's taken seriously. (it being scared of math and all)

it's not economics at all. it's reasoning from unquestioned assumptions about how the world works.

Keynesians like eskimospy believe in sticky prices, which is why they advocate for a central bank to continually inflate the money supply or else prices will keep falling in a free market.

prices, particularly wages, are sticky. it's not a belief, it's observation of reality.

 

[mf0611]

No, none of this.

This is another /facepalm worthy post. Just stop while you're less far behind.

All of this.

Your posts here are facedesk worthy posts.

 

[mf0611]

The core Keynesian Koncepts of sticky prices, sticky wages and a populace traumatized by falling prices are based upon a theory that most people are just too dumb to understand economics.

Nevertheless, Keynesians then obsessively engage in suppressing clear expressions of economic principles while vigorously obscuring and distorting those clear expressions that manage to permeate their active suppression. How odd.

 

[fskimospy]

The core Keynesian Koncepts of sticky prices, sticky wages and a populace traumatized by falling prices are based upon a theory that most people are just too dumb to understand economics.

Nevertheless, Keynesians then obsessively engage in suppressing clear expressions of economic principles while vigorously obscuring and distorting those clear expressions that manage to permeate their active suppression. How odd.

Yes, clearly we are all unable to appreciate your unique economic genius. Don't waste your talents on us, go make a killing in the markets!

You should have taken my advice earlier.

 

[fskimospy]

it's not economics at all. it's reasoning from unquestioned assumptions about how the world works.



prices, particularly wages, are sticky. it's not a belief, it's observation of reality.

Hey the math ruins all the fun parts. Why interrupt a good day of issuing grand proclamations about the nature of human interaction by bothering to figure out if they are true or not?

 

[mf0611]

Don't waste your talents on us, go make a killing in the markets!

Well I would assert that understanding of economics can help a great deal but is not sufficient for making a "killing" in the market.

 

[mf0611]

You do not understand what 'moving the goalposts' is.

I stand by exactly what I stated. I was unaware that providing an incentive (or disincentive) for some economic activity would mean that such an activity must either ramp to infinity or stop altogether. This must be located in those special youtube videos you got the rest of your economics understanding from.

Productivity related deflation was already covered and is not generally applicable to entire economies for reasons that should be obvious.

You have changed your story. First you said price deflation is bad without any caveats.

Now you are admitting not all price deflation is bad. You are not an honest interlocutor.

 

[mf0611]

Oh jesus, not this shit again. Of course you can't prove an economic theory right based on who believes it. Considering that this forum isn't an academic economics journal, however, people generally tend to use the findings and opinions of recognized experts in the field as evidence for their position.

You've said a number of things so far that are unsupportable either theoretically or in the evidence. ie: they have failed really basic elements of a coherent argument. This made me think it was highly likely that you've never taken an economics class in your life, otherwise you wouldn't be saying such silly things. Hence, my question about where you got these ideas in your head.



Actually almost no economist believes that all price declines are bad, and productivity based deflations are an example of that. If you had a better understanding of economics and the literature you would know that and wouldn't be trying to create a straw man here either intentionally or unintentionally.



This is the mix between a straw man and simply another non-sequitur. Nobody says that deflation leads to nobody buying anything. That in no way changes the fact that deflation is in most cases really, really bad.



A third straw man. Nobody thinks that deflation means that eventually everyone just sits on a pile of their own money and never buys anything. Why do you keep doing this?



You're taking one specific sector of the economy and trying to generalize it. That's a big no-no.



Yes, I'm sure when you say things like 'consumption shrinks the economy' it's not that you don't know what you're talking about, it's that you have special, secret knowledge that all the sheeple just don't understand because they're too dumb.

I have said a number of things that are in fact supported theoretically, and it is fully consistent empirically as well.

I have a doctorate in finance, and a masters in both finance and physics. So you can dispense with your fumbling about my education.

Most economists do consider price deflation as bad. Very few understand and accept productivity based price deflation. It is a major reason why central banks around the world won’t allow productivity based price deflation. It is because of the blanket fear of it.

If you had a better understanding of the economic literature you would know this.

I never claimed that you said price deflation leads to people “ceasing to buy anything.” You said they “delay”. I quoted you as saying as much. You need to improve your comprehension.

I am not taking one industry and ” generalizing it.”. I am taking a general truth about productivity based price deflation, and merely using electronics as an example of this. It can occur in ALL industries as production expands.

Prices do not need to keep rising. If you had read the literature, you would have known that price deflation based on productivity can occur in all industries without any drop in profits or employment.

Consumption does shrink economies. This is a universal truth. You don’t understand basic economics.

 

[mf0611]

prices, particularly wages, are sticky. it's not a belief, it's observation of reality.

Wage rates and prices are not RIGID.

The fact they don’t fall within a day or week in response to a fall in nominal demand, is in large part because of inflation, labor market intervention by government that prevents wage rates from falling as fast.

Electronics prices fall gradually over time, even with all the government forces acting to raise them. They are not rigid. Productivity based price deflation really does take place. That is an observable fact.

 

[mf0611]

it's not economics at all. it's reasoning from unquestioned assumptions about how the world works.

False. The assumptions are in fact questioned. They are not confirmed by observation. They are proved based on self-reflection, which very few economists even know how to do.

The way “the world works”, if we consider the ” world of human action”, it works according to how our minds are logically structured. The world of economics is the world of human action, and human action is not like the natural sciences. The natural sciences are subsidiary to human action.

Your assertion that Austrian economics is not economics, is based on a false assumption about what sciences are. Science is not positivism.

Positivism is but one form of science, proper to the non-acting phenomena of the universe. It is not appropriate for human action. The tacit premises of positivism leads to self-contradictions when applied to human actions.

 

[Texashiker]

If all the prices are falling then whatever business you work for doesn't bring in as much money as they did before, so they can't afford to pay you as much as they did before. You lose your job, or you get a pay cut, etc, etc. It's not like everyone suddenly just gets wealthier because of deflation.

Bull crap again.

Prices go down, people buy more because they have expendable income.

Instead of buying 1 TV, people buy one for every child.

Instead of not having children, or one child, couples have 2 or 3 children. What don't you understand that US couples are having less kids because everything is so expensive?

Deflation would have little to no effect on employment as people would buy more, spend more, buy in excess without credit and debt.

With inflation people sit at home watching TV, not spending any extra money because they have no extra money to spend.

 

[fskimospy]

I have said a number of things that are in fact supported theoretically, and it is fully consistent empirically as well.

I have a doctorate in finance, and a masters in both finance and physics. So you can dispense with your fumbling about my education.

Most economists do consider price deflation as bad. Very few understand and accept productivity based price deflation. It is a major reason why central banks around the world won’t allow productivity based price deflation. It is because of the blanket fear of it.

If you had a better understanding of the economic literature you would know this.

I never claimed that you said price deflation leads to people “ceasing to buy anything.” You said they “delay”. I quoted you as saying as much. You need to improve your comprehension.

I am not taking one industry and ” generalizing it.”. I am taking a general truth about productivity based price deflation, and merely using electronics as an example of this. It can occur in ALL industries as production expands.

Prices do not need to keep rising. If you had read the literature, you would have known that price deflation based on productivity can occur in all industries without any drop in profits or employment.

Consumption does shrink economies. This is a universal truth. You don’t understand basic economics.

LOL. If you have a doctorate in finance and think consumption shrinks economies you got it from devry.

Your YouTube doctorate aside, you're a clueless, pontificating dumbass.

 

[alkemyst]

LOL. If you have a doctorate in finance and think consumption shrinks economies you got it from devry.

Your YouTube doctorate aside, you're a clueless, pontificating dumbass.

/ironic