The Great Deflation
- Thread starter GeezerMan
- Start date
Don't worry, Bush & Obama will print more $$ to pay for these bailouts, which will counteract the deflation.
dahunan
Lifer
- Jan 10, 2002
- 18,191
- 3
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Do you have any idea how much money Bush has stolen from us all and from the future actually... borrowing money with date or return near 20 years in future
Letting banks loan 6:1 ..lol.. when it has always been 3:1
People like you are far more of a problem than any politician... you already finding a way to blame someone who never ever had any control
odd you say that the day after Obama said ?We can?t sustain a system that bleeds billions of taxpayer dollars on programs that have outlived their usefulness or exist solely because of the power of politicians, lobbyists or interest groups,?
when Obama does exactly what you thought your party represented, are you going to give in or reject your own ideals?
Hey, I'm not making any judgments, I'm just saying what will happen.
Where's the money going to come from? Republican or Democrat, conservative or liberal, we all have to agree this money comes from somewhere. If Bush were to be in the white-house next here, I'd be blaming him for printing money.
You guys are too touchy.
Sheesh.
Where's the money going to come from? Republican or Democrat, conservative or liberal, we all have to agree this money comes from somewhere. If Bush were to be in the white-house next here, I'd be blaming him for printing money.
You guys are too touchy.
Sheesh.
First
Lifer
- Jun 3, 2002
- 10,518
- 271
- 136
Deflation is definitely becoming a concern with corn prices halving (down to $4 from $8), gas at $51 from $151 just a handful of months ago, and housing prices down over 40% nationwide since the peak last year. Some of that is asset deflation but in general you're seeing non-asset prices coming down. I still don't want to see more rate cuts, but at the same time it's important to make sure there's adequate incentive to invest to bring prices back up by sometime next year.
dahunan
Lifer
- Jan 10, 2002
- 18,191
- 3
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Paul Wolfowitz *Deputy Secretary of Defense Worked very hard to convince our politicians that the Iraq war would pay for itself and only cost 3-5billion total...
^^ would you LYAO at that statement?
His reward for telling them all that BS.... = President of The World Bank
^^ would you LYAO at that statement?
His reward for telling them all that BS.... = President of The World Bank
Originally posted by: cubby1223
Hey, I'm not making any judgments, I'm just saying what will happen.
Where's the money going to come from? Republican or Democrat, conservative or liberal, we all have to agree this money comes from somewhere. If Bush were to be in the white-house next here, I'd be blaming him for printing money.
You guys are too touchy.
Sheesh.
Thou shalt not use the name of the O'Great one in vain! Get used to it.
StageLeft
No Lifer
- Sep 29, 2000
- 70,150
- 5
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However, inflation has not been rampant during this excessive bubble expansion of various markets, so it's not infeasible that the contraction of them will not cause huge deflation. We have seen a 1% drop in consume prices recently, though, which apparently is extremely high. That guy says 2.8%.
However, he's a doom and gloomer. Not saying he's going to be wrong, but he's extremely biased. A key reason prices dropped is because oil has plummeted. Oil was grossly overpriced and it had contributed to an increase in costs of transport of goods. As it drops, clearly prices are going to be motivated by that. And it dropped not because of deflation but simply it was terribly overpriced at the tail end of an insane speculative bubble.
retrospooty
Platinum Member
- Apr 3, 2002
- 2,031
- 74
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http://configure.us.dell.com/d...BF&cid=7420&lid=197374
The end of the world is nigh . Dell PC's w/ 19" LCD for $329!!!
WTF is "nigh" anyhow?
One puzzling thing about the potential threat of deflation: wouldn't it be very simple for the government to fight deflation -- as opposed to inflation? Simply put the printing presses to work, create a 100 billion or so, hand it out as a "stimulus" or some other bs, and voila, inflationary pressure has been created to counteract deflation. Stemming inflation would be much more difficult no?
StageLeft
No Lifer
- Sep 29, 2000
- 70,150
- 5
- 0
This pops up every thread on inflation/deflation and is mostly skipped because I think people for the most part don't understand why this isn't feasible. I still am not sure, though LegendKiller was the closest thusfar to giving an answer I found consumable.
I do not know the details, but logically I would say that the odds of it being that simple are slim to none. I say that because if it were that simple then it would never be a problem, but it is anyways. I realize that is an overly simplistic way to view it, but it makes sense right?
What we need to worry about is a liquidity trap. I honestly believe there will be deflation in 2009 if we are not already there yet. The BAD scenario in this is that as aggregate demand falls sharply against aggregate supply you end up with Deflation. When this happens people FURTHER put off buying because prices will fall in the future. This further depresses the market, people park more cash, and even less investments take place. The ONLY way out of this is to spend spend spend. The gov't needs to spend MASSIVE amounts of $$ in infrastructure, this puts people to work and gets the economy going again.
First
Lifer
- Jun 3, 2002
- 10,518
- 271
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Liquidity trap probably won't occur in the U.S. even though it did in Japan in the early 90's, since American consumers spend far more than Japan does. Japan's bank did lower interest rates to 0% at which point they no longer had a monetary stimulus to dole out, but even at 1% I don't see American consumers needing that severe a kick in the pants. Spending will pick up when wages pick, which is exactly why deflation can be far more dangerous than inflation, as it has a more defined cascading effect on firms' ability to survive. Even just a little deflation.
Born2bwire
Diamond Member
- Oct 28, 2005
- 9,840
- 6
- 71
The deflation seems to be caused by not only a decrease in the cost of resources due to lowered demands but also a sharp decrease in the velocity of money. I think one of the problems here is caused by the fact that if the velocity picks up again, inflation will continue. If you suddenly infuse a large amount of new money into the supply this would cause a small amount of inflation. But once the velocity picks up again, this will compound the inflation caused by the added supply. So you end up having to inject a large amount of money to cause inflation that later compounds on itself, increasing the rate of inflation beyond desired levels. This is the simplest caveat that I can think of to this solution.
Deflation is definitely not something we want, but it's unlikely. We're talking about Americans, keep in mind. Even if deflation is occurring, most Americans either won't notice or won't care enough to save that money for later (ie when it is worth more). Thus, in America, deflation is self-defeating. It was just yesterday that we were discussing the dangers of a society where most of the population tends to rack up large amounts of debt. Americans love to spend NOW, and it doesn't matter whether saving today could buy twice as much tomorrow.
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