Deflation food fight ping.
Posted on 10/23/2014 10:43:12 AM PDT by expat_panama
[snip]
The lowflation of being consistently below an already low target is bad in itself; the deflation it could easy lead to is even worse. There are several reasons. The belief that money made tomorrow will be worth less than money today stymies investment; the belief that goods bought tomorrow will be cheaper than goods bought today chokes consumption. Central bankers can no longer set real (that is, inflation-adjusted) interest rates low enough to restore demand. Wages, incomes and tax revenue all stall, undermining the ability of households, businesses and governments to pay their debts—debts which, in real terms, will grow more burdensome under deflation.
The threat is especially acute because central banks in much of the rich world have already lowered their interest rates to zero.
[snip]
A short spell of deflation driven by cheaper oil would in some circumstances be a tolerable thing. Indeed there are times when deflation can be a symptom of encouraging underlying developments. It can, for example, be brought about when advancing productivity enables the economy to produce more goods and services at lower cost, raising consumers’ real incomes. There were several such periods of “good deflation” while the world was on the gold standard; with growth in the money supply constrained, prices were pushed down whenever the volume of output grew rapidly. Michael Bordo and Andrew Filardo, two economic historians, point to America’s 1880s as a period of “good deflation”, with output rising by 2% to 3% a year from 1873 to 1896. For all the aggregate benefit, though, falling real wages hurt workers in many sectors.
[snip]
(Excerpt) Read more at economist.com ...
So much horse manure. As a business person, I want predictable money, preferably with zero inflation rate.
Stagflation follows.
Deflation food fight ping.
Transistors have gone thru a long deflationary period and we’ve gotten rich off of it. See Moore’s law
http://en.wikipedia.org/wiki/Moore%27s_law
The only way for the scammers to keep bilking us is to keep inflation going.
That’s not “deflation” :-)
Inflation is back door taxation. No wonder they try to get the rubes to accept it and see it as a good thing.
Zero inflation means no price changes and that never happens in a free market. Prices always change when free people are allowed to charge what they want and pay what they want. The only way to have zero inflation is with an all powerful state run economy. Ah, my bad, zero inflation's also possible when everyone's dead.
None of this constitutes inflation. Sounds as if you're confusing zero inflation with price controls.
Inflation is not about individual prices for the various goods and services in the free market. Those can fluctuate in a zero-inflation environment.
Inflation is a rise in the general price level, caused by the government devaluing the currency.
It kind of is, but it's like a quarter slips from the hand down into a drain grate and saying America's got a collapsing money supply.
Who are they kidding? Inflation is simply redefined as necessary to keep it officially low. Take a trip to any food market and you will quickly see a flood of inflation.
Having a hard time figuring out where or whether we diverged here. Sounds like we agree that prices have to fluctuate. Do we agree that if prices generally fluctuate up it's inflation and if they fluctuate down it's deflation?
So, actually, since I’m a responsible saver, all this jargon in this article means I should welcome deflation to a certain extent, but extreme deflation would ruin my mortgage investment.
Got it. So really yay no inflation and yay deflation! Finally conditions that pay off for savers!
BS. The natural rate of inflation is slightly negative as people become more efficient and better tools are made. Anything above that is the government and bankers sticking their hand in the till.
A short spell of deflation driven by cheaper oil
More BS. Inflation is a creation of either over production of money or a fixed money supply with a decreasing total production. Supply shocks, neither positive or negative, are not deflationary nor deflationary. They may decrease or increase prices, but that is not inflation. This argument is like saying the drop in price in electronics(compare $500 for my first 32 MB drive to about $60 for my most recent 128 GB flash drive, or an annual deflation rate of 32% not even count increases in speed or convenience) is bad.
Too many economists confuse deflation in a collapsing economy with the natural deflation from productivity increases and think that since the first is bad (although a secondary effect) that the second is also bad.
Huge pantload.
A “little” inflation is NOT good and the idea that any inflation is some sort of official goal is criminal.
Since this knucklehead takes at face value the government’s completely bogus claims of the level of inflation we are experiencing, he can have no credibility at all (GIGO). And even if the numbers were accurate, the article is still crap.
Sounds we're got different inflation definitions; maybe we'd be get more done if we picked one and went from there. Here's one that most folks are already using:
inflation (ɪnˈfleɪʃən)n
(Economics) a progressive increase in the general level of prices brought about by an expansion in demand or the money supply (demand-pull inflation) or by autonomous increases in costs (cost-push inflation). Compare deflationCollins English Dictionary – Complete and Unabridged © HarperCollins Publishers 1991, 1994, 1998, 2000, 2003
--or if you've already paid off your mortgage you'll find your wages cut and you'll only be able to sell your house'n'car for half what you paid for it. Same goes for all those gold'n'silver coins you hoarded. Other stuff too --from the article:
The belief that money made tomorrow will be worth less than money today stymies investment; the belief that goods bought tomorrow will be cheaper than goods bought today chokes consumption. Central bankers can no longer set real (that is, inflation-adjusted) interest rates low enough to restore demand. Wages, incomes and tax revenue all stall, undermining the ability of households, businesses and governments to pay their debts—debts which, in real terms, will grow more burdensome under deflation.
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