I'd be fine with "spend spend spend", it the government spent the money on infrastructure by letting the private sector do the work. Offer contracts to build roads etc to companies, let them bid on the work, hire people etc. If the answer is "hire a bazillion people to work for the federal government, creating more wasteful government workers, then no.
I'd be fine with "spend spend spend", it the government spent the money on infrastructure by letting the private sector do the work. Offer contracts to build roads etc to companies, let them bid on the work, hire people etc. If the answer is "hire a bazillion people to work for the federal government, creating more wasteful government workers, then no.
Zebo
Elite Member
- Jul 29, 2001
- 39,398
- 19
- 81
Good luck with that. I mean dumping everything.
I have two McMansions FS. One been on the market almost a year. My Realtor says housing in that range are 629 days on the market. I think she's optimistic. You can buy whole developments for 30 cents on the 2006 dollar around here.
Slew Foot
Lifer
- Sep 22, 2005
- 12,381
- 96
- 86
Well, for the most part we had rampant inflation with a comcomittant inflation in salaries so if we have deflation without a deflation in salaries than that would be great for everyone, especially us savers. However, governments around the world have shown that they are dedicated to printing themselves out of debt so I don think deflation will be a long term problem.
Deflation is a much much much more dangerous problem than inflation. Also, I don't think we've seen "rampant" inflation for at least two decades.
I think Bill Hicks had it best in a bit way back in the early 90s before he kicked the bucket:
"What are we gonna do when we realize we're all one and stop building nuclear weapons?!? It's gonna fuck up the economy! The economy that's fake anyway!"
It is not inflation it is a correction. When you over or hyper-inflate products like real estate more than they are worth, then the market is due a correction to get back to reality. Value of money is just perception. It is a concept not a reality.
does gas prices have to do anything with this?
as i can see my parents lost their 41k. house prices are going down. jobs are in a struggle. we need CHANGE.
as this deflation continues its a dollar is hard to spend. its like $1 is $100 dollars.
as i can see my parents lost their 41k. house prices are going down. jobs are in a struggle. we need CHANGE.
as this deflation continues its a dollar is hard to spend. its like $1 is $100 dollars.
Meh. Bernanke has identified and acknowledged the role of FRB policies in the crushing deflation of the 30's.
Clearly, his actions indicate that he has no intention of allowing history to repeat itself in that respect, at least not in the sense that the FRB can make it worse rather than better. His efforts earned him the moniker of "helicopter Ben" among his critics, accompanyied by a cartoon of him tossing cash out of a helicopter over Wall St...
It remains to be seen, however, if even his extraordinary efforts will have the desired effect, given the huge overextension of credit and the ensuing liabilities among the world's largest financial institutions... While the housing situation led the way to the current realization of that, it's the derivatives market that really defines the problem- it's just a fancy form of no-limit gambling on credit... where the more you gamble, the more you're theoretically worth, so you can gamble even more...
Clearly, his actions indicate that he has no intention of allowing history to repeat itself in that respect, at least not in the sense that the FRB can make it worse rather than better. His efforts earned him the moniker of "helicopter Ben" among his critics, accompanyied by a cartoon of him tossing cash out of a helicopter over Wall St...
It remains to be seen, however, if even his extraordinary efforts will have the desired effect, given the huge overextension of credit and the ensuing liabilities among the world's largest financial institutions... While the housing situation led the way to the current realization of that, it's the derivatives market that really defines the problem- it's just a fancy form of no-limit gambling on credit... where the more you gamble, the more you're theoretically worth, so you can gamble even more...
..."moniker of "helicopter Ben" among his critics, accompanyied by a cartoon of him tossing cash out of a helicopter over Wall St..."
Enjoy a bowl with your kids today.
inflation vs. deflation can be a false choice.
you can have deflation in some property categories (like used leather
sofas on Craigslist, and real estate in California), and inflation in other
categories (like food, oil in 2009-2010, gold, and real estate in Monaco).
you can have deflation in some property categories (like used leather
sofas on Craigslist, and real estate in California), and inflation in other
categories (like food, oil in 2009-2010, gold, and real estate in Monaco).
None of you know what deflation and inflation are, you're using Keynesian definitions. Deflation is contraction of the money supply, inflation is an increase in the money supply. This can have effects on prices, but prices are the effect, not inflation and deflation itself. Inflation can show up in many places, but the government only officially recognizes a few of them so they can say they're not fighting "asset-based inflation" which they consider good, and other bullshit to justify their excess.
People don't mind when it goes into home speculation or tech stocks or bond recycling, that's the boom period everyone loves and is oblivious to because they think they're getting rich. But when it shifts down into commodities, people cry bloody murder. And that's invariably where it ends up. Look at a chart the last fifteen years of any commodity and tell me with a straight face that we have deflation. Gold has outperformed the Dow in the last ten years, oil is at $50 from $20 in 2000.
It's true, we've had a short-term deflation as credit is withdrawn from our markets. Hedge funds were borrowing against collateral that they're now being forced to sell after the bets went sour. It's called a margin call, and that involuntary selling is not the same as voluntary selling. The government is currently trying to reinflate that lost credit with pure inflation. The problem is, you can't replace foreign savings with paper. One is wealth backed by a product, the other is not. Pure inflation this time, a total debasement of the dollar, and nominal prices for everything are going to reach new highs. Homes and stocks will eventually go up, but the cost of living will outpace them. Remember, nominal value means nothing, relative value is everything. A $1 million home is not good if it costs you 10k to fill up your fridge.
Perhaps the dumbest mistake of all is the idea that falling prices is a bad thing. A lower cost of living is a good thing, that's what made the Great Depression a better scenario, because that's what happens under a gold standard, it's far more preferable to have deflation than inflation. What caused the depression wasn't deflation, it was the inflation of the 20s that preceded it. Saying the recession was the problem is like saying withdrawal from a high is the problem instead of the high.
Unfortunately, the government blocked trade and took control of people's capital, so the falling prices didn't matter. In fact, it even stepped in to prevent prices from falling by plowing under fields and slaughtering livestock, they went completely insane and turned what would have been a 3 year recession into a decade long depression.
In short, anyone who thinks we're headed for deflation must think we are on a gold standard like in the 30s. We don't have gold anymore, we have a printing press. It's all these idiots know, they're using it, they're going to keep using it, and it will cause prices to go up when it finally floods the market.
People don't mind when it goes into home speculation or tech stocks or bond recycling, that's the boom period everyone loves and is oblivious to because they think they're getting rich. But when it shifts down into commodities, people cry bloody murder. And that's invariably where it ends up. Look at a chart the last fifteen years of any commodity and tell me with a straight face that we have deflation. Gold has outperformed the Dow in the last ten years, oil is at $50 from $20 in 2000.
It's true, we've had a short-term deflation as credit is withdrawn from our markets. Hedge funds were borrowing against collateral that they're now being forced to sell after the bets went sour. It's called a margin call, and that involuntary selling is not the same as voluntary selling. The government is currently trying to reinflate that lost credit with pure inflation. The problem is, you can't replace foreign savings with paper. One is wealth backed by a product, the other is not. Pure inflation this time, a total debasement of the dollar, and nominal prices for everything are going to reach new highs. Homes and stocks will eventually go up, but the cost of living will outpace them. Remember, nominal value means nothing, relative value is everything. A $1 million home is not good if it costs you 10k to fill up your fridge.
Perhaps the dumbest mistake of all is the idea that falling prices is a bad thing. A lower cost of living is a good thing, that's what made the Great Depression a better scenario, because that's what happens under a gold standard, it's far more preferable to have deflation than inflation. What caused the depression wasn't deflation, it was the inflation of the 20s that preceded it. Saying the recession was the problem is like saying withdrawal from a high is the problem instead of the high.
Unfortunately, the government blocked trade and took control of people's capital, so the falling prices didn't matter. In fact, it even stepped in to prevent prices from falling by plowing under fields and slaughtering livestock, they went completely insane and turned what would have been a 3 year recession into a decade long depression.
In short, anyone who thinks we're headed for deflation must think we are on a gold standard like in the 30s. We don't have gold anymore, we have a printing press. It's all these idiots know, they're using it, they're going to keep using it, and it will cause prices to go up when it finally floods the market.
It's really difficult because as it stands now, only the Federal Reserve controls the money supply. Congress and the executive branch have no say in it.
Edit: Just to elaborate, when Congress spends money, it is borrowed from others in the form of bonds. No new money is being created.
Wow, great post. Thanks for the same driveling, sniveling, "gold is god" bullshit you always espouse.
Deflation, even moderate deflation, is far worse than inflation. It utterly destroys motivation for growth and credit (to good oblgors). It causes instability in how companies are able to plan, since they don't know if the price will go down next year. If it does, how can they plan their capital budgets? How can they hire people? If prices suddenly contract and destroys their profit margin, how can they survive?
Predictability is *KEY* in business. Business plans, capital structures, supply chains, are all managed by predictability. Long-term planning is paramount when running a business, this is why we manage to a low inflation number, otherwise we may add further chaos to prevent long-term planning. Mild inflation, which is predictable, is far more preferable and stable for businesses. You, of course, have no fucking clue how a business is run, nor how to plan a capital structure, so you think it's all willy nilly.
How could we have had Inflation in the 1920s when we had a gold backed currency? Isn't gold supposed to prevent this?
Using real data, why don't we just cut through your crap.
1. average CPI was as follows.
1920: 15.90%
1921: -10.85%
1922: -6.10%
1923: 1.80%
1924: .45%
1925: 2.44%
1926: .94%
1927: -1.92%
1928: -1.15%
1929: 0%
Wait? What the fuck? Where's all that massive *INFLATION* in the 1920s? It must be that darned "shadow inflation", right? No, wait, it was a change in how CPI was calculated, because those darned Reagan/Bush/Clinton/Bush people changed it all. Hoover was actually a Bush.
You see, deflation wasn't caused by inflation, it was caused by NOBODY HAVING A FUCKING JOB SO YOU CAN'T CHARGE AS MUCH FOR STUFF! Then, since nobody had a job (well, ok 25% didn't), then people could drive labor costs down, further exacerbating the problem.
Then, since the Fed tried to protect the currency, rather than providing liquidity, businesses either went out of business, exacerbating the problem.
Mr. College Wannabe Macroeconomist above would love people to think that the evils of "inflation" is all about money supply, but it isn't. He'd also love people to think that gold is god, but it isn't. Gold causes far more economic harm than it prevents. Protection of the dollar and gold caused the GD. Countries NOT on the gold standard exited a far shallower GD faster than countries on the gold standard.
That's so wrong it's hard to tell where to begin. The debt/ deflation scenario of the 30's wasn't driven by falling prices, deflation was driven by lack of liquidity and employment. Demand fell, and prices followed, not vice-versa. Prices fell so far and so fast that harvesting crops and butchering animals wasn't profitable for farmers. So they didn't, even as millions went hungry.
And the whole routine about locking up capital is bogus. People who had money, the financial elite, saw no reason to invest, to take a chance, when their money gained value doing nothing. Business was failing left and right, so they achieved liquidity and held it.
It's true that the country was heavily dependent on credit, and suddenly there wasn't any. There also wasn't enough currency to pick up the slack, and the FRB of the time refused to create it, citing the gold standard, even though gold reserves were growing. Going off the gold standard allowed them to create more currency, but they did so only reluctantly.
Ben Bernanke, current head of the FRB, has acknowledged the role of his organization in extending the Depression...
IHateMyJob2004
Lifer
- Sep 29, 2004
- 18,665
- 67
- 91
Sure, there is deflation. Maybe to by the academic definition, but inflation has been much higher than "reported" over the past 5 years.
Quite simply, the cost of living has gone up alot more than people are willing to admit over the past 5 years. Higher housing prices, gas prices, commodity costs, etc.
Quite simply, the cost of living has gone up alot more than people are willing to admit over the past 5 years. Higher housing prices, gas prices, commodity costs, etc.
BurnItDwn
Lifer
- Oct 10, 1999
- 26,080
- 1,560
- 126
Is he supposed to back up the claim that the Core CPI (excluding food and fuel) is often used instead of the "real" CPI (which includes food + fuel costs), thus, inflation often gets understated (isn't this considered common knowledge?)
Or is he supposed to back up the claim that there is deflation?
Fuel prices have just started dropping, home prices have dropped, Comparing Black Friday deals vs last years, it would appear that consumer good prices are dropping, what more is there to "back up"?
Both core and headline CPI are available to the wide market, as they are released simultaneously. He never said that Core CPI was understated, he said inflation was, not differentiating. If he is calling into question both core and headline, then he should provide backup.
Vic
Elite Member
- Jun 12, 2001
- 50,415
- 14,306
- 136
People love money and usually fail to understand that it is an abstract with no inherent value of its own. Deflationary pressures cause people to hold onto their money, and discourage investment and spending in other economic areas where it would be more useful, like consumers buying goods, or employers creating jobs and purchasing inventory.
IMO, the 3 most important things people can learn about economics are:
- Economy = activity. Without activity, there is no economy.
- Money is an abstract, a medium of exchange with no value of its own.
- There Ain't No Such Thing As A Free Lunch.
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