Posted on 07/28/2015 9:08:00 PM PDT by BenLurkin
The deflationists argue that hugely accommodative monetary policy in the U.S., Japan (and nearly everywhere else in the world) has failed to produce real growth. Debt and obligations to social programs such as Medicare and pensions are so massive they can’t be paid. Therefore, according to deflation forecasters, they won’t be.
Their predictions of default and accompanying bank failures, bankruptcies, and surging unemployment were bolstered by recent news out of Greece. Falling commodity prices and economic malaise have reemerged. They claim zero interest rate policy and quantitative easing merely delayed the inevitable for a bit.
The inflation camp shares the conviction with deflationists that there is too much debt in the system. But they differ on the outcome. Harry Dent and those in his deflation camp figure that central banks and governments will ultimately be powerless to stop default. They think the purchasing power of the dollar will rise against everything else, including gold.
We expect default to occur primarily through inflation, with debts stealthily repudiated through repayment in less valuable dollars.
Deflationists have spent most of the last 100 years in the wrong. Recent events in Greece are only the latest example of officials staring deflation in the eyes, then flinching – they ultimately chose to continue printing and borrowing.
The Chinese government’s response to selling in China's stock market provides another glimpse of what to expect. When push comes to shove, governments have limited tolerance for pain and will choose inflation, not deflation.
(Excerpt) Read more at resourceinvestor.com ...
Deflation deniers devastated by gold's reality.
Inflation is actually a GOOD thing, IF you are young, employed in a position where wages can go up, and you are in debt. My mom and dad’s mortgage payments were $55.00 a month, I’m not kidding. The bank BEGGED them to pay it off at a discount in the 70’s, because the overhead costs were bleeding the bank!
My nightmare is that inflation will go in full bloom the day I retire.
Quantitative easing is inflationary. More dollars buy less and less
There are two causes of deflation: government meddling (the bad kind of deflation) and increasing productivity coupled with a stable money supply (the good kind). We, of course, live in a time when only the former exists.
My prediction is that the collapse from all the overspending will come. It must eventually given the rates involved I don’t see how it can be inflated away without such impact to average people that it drives the masses to poverty.
Deflation is typically driven by overcapacity, improvements, and efficiencies that cause commodity inputs to be more expensive then the outputs over time. It’s what happened in the late 1800’s due to the fast expansion of mass production. It’s what has happened in the technology world with Moore’s law, etc.
So when the collapse comes the basics will inflate: food, housing, energy. Everything not required to survive will deflate. It’s actually been doing that over the past 7 years since 2008. Food is up, energy has only been held steady due to the new technologies implemented, cars are not being sold as often (see: http://www.freerepublic.com/focus/f-chat/3317989/posts), housing is still in a slump, but rents are up....
Sorry started rambling....
Technology.
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