Who’s afraid of deflation?
Who’s afraid of deflation?
For most policymakers, deflation is the stuff of nightmares — scarier even than bank failures and stock market collapses. As the economy stumbled, deflation became Lords Voldemort and Sauron rolled into one.
In recent months, however, this economic supervillain seems to have lost its power to intimidate.
With growth reviving, many economists now believe that deflation is highly unlikely to materialize.
Another group suggests that deflation is not nearly as nefarious as often portrayed. Since falling prices are not generally associated with depression, we were wrong to be frightened in the first place.
Sadly, both of these reassuring premises are wrong. We should still be afraid of deflation.
Continue:
http://blogs.reuters.com/commentaries/2009/08/24/whos-afraid...
deflation better than inflation
in a nutshell people become more enslaved with inflation, and less enslaved with deflation.
why? do you ask?
because there is a tendency with inflation to pass the rising price margin burden on to the _wage-earner_. almost never do people's wages keep up with cost-of-living increases, because the money devalues itself so quickly. and even if the employer actually did give out a cost-of-living raise on top of their normal raises, then it would merely be based on a government figure -- not the true cost-of-living rate. it is in this manner, that people perceive that they are making "more" than they were 10 years ago, but actually are not.
with that being said, there is a tendency with deflation to pass the lowering price margin burden on to the _employer_. with lowering prices, the employer has to find ways to keep the company efficient. but cutting wages is the path of _most_ resistance, so employers would almost always pursue other cost-saving avenues first and only cut employee wages once those options were exhausted.
so with inflation causing more and more [slavery]
so with inflation causing more and more people to live under harsher cost of living conditions (more slaves), then the markets artificially shift resources to suit the new market demands.
remember. slaves buy what slaves can buy. while non-slaves buy what non-slaves can buy.
so the companies that make luxurious items start going out of business. bread making machines and luxurious suv's tend to become a thing of the past.
nothing wrong with this, of course, because it brings a rise to the manufacturers who make less-luxurious items. but it also means we become a country that produces crap that only slaves tend to buy (instead of luxury items that non-slaves tend to buy.)
so in more free countries, there becomes a stark contrast in difference between what _they_ produce over what we are producing. Luxury SUVs, victoria secret, junk food versus perhaps bicycles, potato sacks, and bags of rice.
so the less fortunate country gets jealous because the wealthier one is living in perceived "gluttony" but is totally oblivious to the fact that the luxurious goods were caused by freedom in the first place.
read: wealth is a function of freedom.
so contrary to what some of the elites believe, the country with the most slaves actually loses.
Thomas Jefferson was afraid of it
"If the American people ever allow private banks to control the issue of their money, first by inflation and then by deflation, the banks and corporations that will grow up around them (around the banks), will deprive the people of their property until their children will wake up homeless on the continent their fathers conquered."
-Thomas Jefferson
"It is a cruel thought, that, when we feel ourselves standing on the firmest ground in every respect, the cursed arts of our secret enemies, combining with other causes, should effect, by depreciating our money, what the open arms of a powerful enemy could not."
-Thomas Jefferson
How Americans can let a
How Americans can let a bunch of people who believe the monetary policy of the nation should be adjusted in response to some arbitrary measure dramatically affected by taxes on cigarettes, out of all things, is truly beyond me. You'd think some day, someone somewhere with some access to power, would realize how silly that really is, and pick a more appropriate way of measuring inflation. It's not like its rocket science.
asking if deflation is good
is kind of like asking if fire is good.
well, if it's cooking my hot dog...fire's pretty good.
if it's burning down the whole house....not sooo good.
a lot of deflation or inflation in a short period of time, or worse, a volatile cycle of both, whipsawing people into the ground.
yea'd. i'd say.
"it depends"
that's a great analogy
thank you.
when the fed oversaw the decline in the money supply in '33, they were doing it artificially and quite radically.
but a gradual decrease in the money supply which causes prices to "fall," is not a terrible thing if left alone, so long as companies remain efficient because everyone is benefiting from falling prices equally!
in fact deflation is a good thing because it tends to unravel the cost-of-living increase that comes with inflation.
a cost of popcorn was only 2 cents. now it is 6.50. that's a 325x increase, although the average wage was not nearly 325 times less what we make today. so, they were better off before all the inflation. we are becoming more enslaved.
Deflation is good for poor
Deflation is good for a responsible poor man, bad for gov't & rich.
Good people do Good deeds
and are no respecter of person
I think you have it
I think you have it backwards. Deflation means a stronger dollar and a stronger dollar is beneficial to those who have many of them. Inflation means a weaker dollar and weaker dollars benefit those who are in debt.
...
why is deflation bad for the rich?
either your money will be worth more later or the prices will be lower in the future... if you paid higher prices because of early adoption that is not bad in and of itself. things wear out so their value should approach ZERO...
The Liberty a society retains is inversely proportional to the number of Lawyers in the Government.
The Liberty a society retains is inversely proportional to the number of Lawyers in the Government.
Unless my reasoning has fault... In a HARD money society
deflation is a given. If there is a fixed amount of gold (which is basically a given) then either the value of the gold has to increase or GOLD remains fixed and the price of the ever increasing supply of goods and services continues to approach zero in terms of prices per unit of whatever the good/service may be.
With a fixed medium of exchange on a 1 to 1 reserve rate this is how the system would operate. The longer you waited the more you could buy PERIOD. Prices have to fall or gold value must increase or gold mining output must increase which in terms of what the gold would purchase the relative value would increase thereby making mining more economical in terms of purchasing power whether through increased gold value or deflated prices.
All I have been led to believe in my GOVT education leads me to think I mistaken no matter what my brain and my mathematical reasoning keep showing so crystal clear.
The Liberty a society retains is inversely proportional to the number of Lawyers in the Government.
The Liberty a society retains is inversely proportional to the number of Lawyers in the Government.
Didn't Von Mises
predict that with a gold based currency there would be a slow deflation over time? Believe I read that in "Human Action", but that was a while back.
That and the tech factor...
As commodity industries grow technologically, the supply can outstrip demand longterm. So prices will lower and settle on what a free market deems fair.. as opposed to our current system.
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
Dennis Kucinich Democratic Presidential Candidate
... who said he would want Ron Paul as his Vice President, just elicited out of the Federal Reserve in congressional hearings, that the Federal Reserve is paying banks not to lend money to control inflation. Also in another Federal Reserve testimony (one example of many) the Federal Reserve Gave 200 Million dollars to New Zealand to take the pressure of the U.S. Dollar inflating. They are not worried about deflation, they are worried about hyper-inflation. Oh, by the way, all the money given to banks to help struggling Americans is still at the Federal Reserve in each bank's account accruing .5 % interest. Dennis Kucinich, said, "Another Fraud on the American Public !"
Even Warren Buffet is predicting the long bond will break (high interest rates).
DEFLATION is great for who?
DEFLATION is great for who? The creditors and wallstreet
both inflation and deflation hurt the common man by perversely and very unnaturally expanding or contracting their personal share in the economy.
and they usually do it with language and actions the common man cannot see or understand.
I don't care what is backing our money.
Personally, I'd like to hear someone talk about the feasibility of microchips or some form of technology backing our money. But there's one thing i will definitely say, it has to be backed by something more than hot air.
Deflation is good for the
Deflation is good for the common man and bad for government. Inflation is the opposite.
If the great depression was a deflationary depression
how was it good for the common man?
Explore Orthodox Christianity
Not good for the common man
Not good for the common man if he is in debt, or anyone in debt, for that matter.
That is why the Fed favors inflation over deflation - because everyone is in debt. Debts are very hard to pay back in an environment of falling money supply - there's just less floating around to pay back debts. Further, wages fall. Deflation is great for savers, however.
deflation good for savers
Deflation is good for those who have saved. Their saved purchasing power will increase.
Not everyone is in debt...
http://FlipFlopRomney.blogspot.com
Right on Michael,
Right on Michael, thanks
Good people do Good deeds
and are no respecter of person
they favor inflation because
they favor inflation because it is a hidden tax.. when you can print money to pay your bills and the citizen suffers by having to pay higher prices for goods, they just don't care..
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Under the current fiat
Under the current fiat regime, inflation is a requirement in order to just keep the economy standing still. The money supply has to keep growing in order that everyone who is in debt (and all money in this regime is backed by debt) can continue with their debt service. If the money supply doesn't grow, there will necessarily be defaults, and a deflationary spiral that TPB can easily lose control over.
This is why their terrified of deflation, but not inflation.
And yes, it is a hidden tax that favors the Federal government and the politically well connected like banks & defense contractors.
Proof of that...
Is the current purchase power of the dollar now vs 1913.
A quick inflation calculator....
http://data.bls.gov/cgi-bin/cpicalc.pl
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
lol.... they still do not
lol.... they still do not get it...
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
Deflation is here, right now
If you can prove otherwise, please state your case. I'm still waiting for the news to come out that is supposed to cause a bank holiday you predicted last week for Aug. 26th, tomorrow, bad_karma aka sierra. And don't bother trying to take down the post again this time, I already made a copy of it and took a screen shot. I'm filing it with the rest of your predictions: $200 oil, $100 silver, and the closure of the COMEX market by Dec of last year ( just to name a few). If posting predictions that never come true is "it", then I guess you got "it". lol
wow.
Copys of posts, screenshots, filing paperwork....
Because of someone's forum posts?
Stalk much?
~Live life to its fullest, with an open heart, open arms and most important... an open mind~
lol.. yea this guy is still
lol.. yea this guy is still a virgin....
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
all I can say is this...
all I can say is this... what did you predict interest rates to be at last fall/winter? if you can not even predict interest rates, how can you be trusted to say anything on the economy.. Go back and read everything talked about in early 2008 . a few people on here said that we were heading into a terrible fall and low and behold what happened? only the worst financial crisis since the great depression.. when id thius recession start? you said in the spring of 08 that we were not in recession and good times were just around the corner, interest rates would be rising .. blah blah blah... what happened Jeff? Then the Government comes out and says the recession started in Dec of 07!...
talk about LOL... dude you don't have a clue.. oh and then we had that wonderfull thread you authored called... (drum roll)....... Gold is a fiat currancy also.... lmao... as for deflation... the only place I see it is in the price of my house.. food is still high.. clothing still high, medical care still high.. tell me this batman.. if there is deflation then why is the price of oil going up? were supposidly in a deep recession with much less oil being used or needed why is oil back up over 70.00/barrel? why is gold and silver still up? again you can't even predict interest rates.. the basic of economics.. so people should trust what you write here? LOL. also dimwit... I am not predicitng a bank holliday.. all I am telling people to do is to prepared incase. there are very good sources coming out on this possiblity.. we will see what happens.. ofcourse I hope it does not happen but unlike you in your simple mind I am prepared for it if it does come.. are you? ..... didn't think so.
A prudent man foresees the difficulties ahead and prepares for them; the simpleton goes blindly on and suffers the consequences. Proverbs 22:3
Matthew 10:34 Think not that I am come to
send peace on earth: I came not to send peace,
but a sword.
SIERRAHPBT AKA bad_karma: Pathological Liar
SIERRAHPBT you are pathological liar. The interest rate discussion was whether the Dollar would collapse last Aug. I said that either the EU would cut the Euro discount rate, or the FED would raise rates, but the issue was the dollar, which rallied. The FED only cut rates after the EU and several other countries did, and it was months later.
http://www.fxstreet.com/rates-charts/usdollar-index/
Secondly, my post was"Gold is a fiat currency too?" ( of course with your narcissistic personality disorder, you omit the question mark to embellish your point) The post was about valuing gold in dollars vs other hard assets. In other words do not use a fiat currency to value a hard asset because fiat currency valuation are perceived value. (Sorry if it was over your head SIERRAHPBT )
Below is the description of a pathological liar. If the shoe fits, take it out of your mouth SIERRAHPBT AKA bad_karma.
1. Exaggerates things that are ridiculous.
2. One-upping. Whatever you do, this person can do it better. You will never top them in their own mind, because they have a concerted need to be better than everyone else. This also applies to being right. If you try to confront an individual like this, no matter how well-intentioned you might be - this will probably not be effective. It's threatening their fantasy of themselves, so they would rather argue with you and bring out the sharp knives than admit that there's anything wrong with them.
3. They "construct" a reality around themselves. They don't value the truth, especially if they don't see it as hurting anyone. If you call them on a lie and they are backed into a corner, they will act very defensively and say ugly things.
4. Because these people don't value honesty, a lot of times they will not value loyalty. So watch what you tell them. They will not only tell others, but they will embellish to make you look worse. Their loyalty is fleeting, and because they are insecure people, they will find solace in confiding to whomever is in their favor at the moment.
5. Obviously, they will contradict what they say. This will become very clear over time. They usually aren't smart enough to keep track of so many lies (who would be?).
Sound familiar SIERRAHPBT AKA bad_karma ? The Daily Paul is Michael Nystrom's forum, not your Bully Pulpit to prop up your personal insecurities and your fantasy of always being right. Grow up and grow a pair.