What the world needs now.....is a little inflation.

[techs]

If the housing market hadn't collapsed in a sea of bad loans, then much of he current crisis would have been averted.
So why did the market collapse?
No inflation.
While those with adjustable rate mortgages would have suffered, those with fixed rate mortgages would have done fine.
And the arm mortgages could have been converted to fixed rate, those people given some help, and the crisis is over.
Why has there been so little inflation? When a country spends and spends and borrows and borrows there should have been massive inflation. Prices should have been going up, along with salaries.
The reason there is no inflation?
China.
Since China does not trade its capital on the world market (hence the term capitalism) there has been this artificially cheap place to move your business and keep your prices from increasing.
So, and I know this may shock those who think I am not a "free trader" the problem is the LACK of free trade with China.

If China had allowed its currency to be free traded, it would have done 2 things:

1) given us enough inflation to keep homeowners in their homes.
2) slowed and possibly even reversed some of the flight of businesses around the world to China.

 

[JS80]

OK Cartman.

 

[BigDH01]

If inflation had kept up with housing price increases, our economic system would've collapsed long ago.

And "a little" inflation is relative. Our real rates of inflation have actually been a little high in my opinion.

BTW, your hyper-inflationary scenario comes on the backs of savers who take an absurd beating.

 

[Jaskalas]

Originally posted by: BigDH01
BTW, your hyper-inflationary scenario comes on the backs of savers who take an absurd beating.

People who can save are rich evil people who need a beating. No? That wealth belongs to the masses, or so the masses say.

 

[Thump553]

There has been plenty of price inflation. Unless you work for the government or the like, there has been real wage declines.

 

[StageLeft]

Originally posted by: BigDH01
If inflation had kept up with housing price increases, our economic system would've collapsed long ago.

And "a little" inflation is relative. Our real rates of inflation have actually been a little high in my opinion.

BTW, your hyper-inflationary scenario comes on the backs of savers who take an absurd beating.

It sure does. Not everybody is in debt hugely. I have a fixed rate mortgage so if a bigmac cost $500k I'd own my house free and clear, but the other repercussions would be stunning.

Also, if inflation kicked in hugely, those people with adjustables would have no luck getting a fixed except at an exhorbitant rate.

 

[BigDH01]

Originally posted by: Thump553
There has been plenty of price inflation. Unless you work for the government or the like, there has been real wage declines.

I work for a university which is a proxy to state government. Our raises last year were only 2.5%. Didn't keep up with inflation. We experience real wage deflation too.

 

[Thump553]

Originally posted by: BigDH01

Originally posted by: Thump553
There has been plenty of price inflation. Unless you work for the government or the like, there has been real wage declines.

I work for a university which is a proxy to state government. Our raises last year were only 2.5%. Didn't keep up with inflation. We experience real wage deflation too.

Not to seem like a whiner, but the fact that you got any sort of raise at all, plus substantial job security, plus probably sterling medical and fringe benefits places you miles ahead of those of us who work in the real world.

 

[StageLeft]

Originally posted by: BigDH01

Originally posted by: Thump553
There has been plenty of price inflation. Unless you work for the government or the like, there has been real wage declines.

I work for a university which is a proxy to state government. Our raises last year were only 2.5%. Didn't keep up with inflation. We experience real wage deflation too.

I got 1%, which didn't pay for my increase in gas. Sad! I was going to pre-empty my review next year by indicating this fall my desire for a raise. I think that will fly like a lead balloon these days, though.

 

[winnar111]

Don't worry. Barack 'Jimmy Carter' Obama will return us to 1980s inflation and unemployment.