Posted on 09/19/2012 2:45:49 AM PDT by OwenKellogg
That’s an interesting scenario you presented there. What I find so scary about it is this: With no money down on the $120,000 condo and a 30-year fixed-rate mortgage at 5%, the property taxes on that condo would be almost as much as the mortgage payment itself. And this on a real estate asset with no money down and therefore no initial equity!
Again, however, I am looking for evidence in some major market other than real estate to support the proposition of deflation in the article.
This is a good point, and it's hard to pin "inflationary" and "deflationary" trends down for many products because it's impossible to compare them over a long period of time. When you look at cars or consumer electronics, for example, you usually find that they get more expensive over time for "state of the art" products ... but actually get less expensive over time when you consider how much technology advances. Compare a 2012 car with a 1980 car and you'll find that the 2012 car is much more expensive. But if you were to build a car today with 1980 technology in it, it would likely be dirt cheap.
The same goes with many different types of consumer electronics. Look at how cheap a computer gets after the technology has been on the market for even just 1-2 years. Pocket calculators are another good example. These used to be very expensive, but are now so cheap that they can practically be given away in a cereal box.
I would think that anything produced today that has seen a steep decline in demand is in a "deflationary" cycle even if the nominal price in U.S. dollars is higher. That's just my sense about this, though I may be completely wrong about it.
I'd point out, though, that the scenario you describe is precisely why the Fed is so hell-bent on propping up the banking industry by buying up all these toxic mortage-backed securities. A situation where massive numbers of borrowers go into default without giving a damn about the consequences will bring this nation's economy to the ground.
My point was that as it relates to the subject of this thread about inflation, deflation and other considerations related to commodity and product supply and demand, the question about whether a product is made in the U.S. or overseas doesn't have much of an impact at all. If anything, foreign production has had a counter-inflationary impact on the U.S. economy for any products where the cost to the consumer for a foreign-made version is much lower than it would be for an American-made one.
The well-founded concerns about the wisdom of losing our industrial base are a whole different matter, but are really the subject of a different discussion.
Thank you! You go right ahead, and don’t even feel obligated to give me any credit for it. I didn’t take any of that directly from another post, but I’ve learned so much on this subject from reading through many different threads here on FreeRepublic that I can’t really claim any of the things I post here as “my own” material.
The Federal reserve act was passed in 1913, as was the 16th amendment allowing Congress to levy an income tax. Suffrage was ratified in 1920 with the 19th, opening up the nanny state. The 1947 nat'l security act codified Fed powers to ensure continuation of government. Finally, Kennedy delivered the coup de grace with the passage of the 1965 immigration act.
I consider FR 'conservative porn', in that it delivers a fantasy version of reality to those who seemingly cannot grasp that the constitutional republic they may think still exists was long ago usurped by players who are very familiar with human nature.
Give a bunch a 'tards a veritable empty continent with abundant natural resources, and a pretty document outlining some supposed 'rights' and see how long they could keep it. As we've seen, it didn't take long at all.
But all things come to an end - it's the nature of diminishing returns. Right now, the elite have overplayed their 'nice' hand via the Ponzi, so we're gonna see the 'mean' hand brought to bear.
What I meant by my comment is to understand were we're at, and how to navigate what must necessary come. For, you see, it isn't *different* this time around.
You're making the very common mistake of confusing the "price" of something with its "cost." Just because prices are rising it doesn't mean the "cost" is rising. It simply means that the price as measured by a certain medium of exchange is rising.
To illustrate this point, just pick a specific product that you've purchased on a regular basis over many years. Put together a table showing how much that product cost each time you purchased it, then add another column to that table showing how much it would cost if you paid for it in ounces of gold instead of dollars. You'll likely find that the price of the product -- when measured in ounces of gold instead of dollars -- hasn't changed very much at all ... and may have even declined over time.
I'm OK ... How's things?
Wrong...Stagflation is here
In regards to a mortgage - as the value of the dollar plummets, isn’t it harder to pay off the debt? Other expenses would devour your budget before debt payments.
Deflation would mean your bank balance would buy more, but your mortgage (if you have one) would be harder to retire.
My guess is the opposite scenario is more likely.
Any policy other than a constant value for the dollar is bad policy. Texas Governor Perry got it right last year: http://www.youtube.com/watch?v=pZ6BCWjX04A#t=24s
I've seen it in my industry. I'm constantly approached by recruiters, and the prices they mention make me gasp.
It is a frightening aspect of the false unemployment numbers that barely makes the news; they talk of the “underemployed”, with no reference to the “underpaid”. I have feelers out on some job sites (with automated searches linked to an email address), and I’d be taking a significant pay cut at this point to switch jobs.
How people are able to survive on these wages is beyond me; I don’t see them lining up to vote for Obama, though. NJ has lost a lot of high-paying jobs, between the decimation of the financial sector and the general malaise of the high-tax states of the northeast; Obama will have to spend time & money here to hold onto NJ.
Think of it this way: If you have a $200,000 mortgage and you're paying it off over 30 years at a fixed rate of interest, your mortgage payment will never change even if the value of the dollar declines. Sure, the other things you purchase regularly will become much more expensive in an inflationary environment ... but it's THOSE things that become more difficult to afford, while your housing cost becomes a smaller and smaller portion of your overall living expenses. At some point you end up in a scenario like I described earlier in this thread related to the Freeper who declined to purchase a condominium. In that case, the mortgage payment on the condo wasn't much more than the property taxes!
Anything GB manufactured i.e. furniture, metals etc. we put a tariff on it.
“the elite have overplayed their ‘nice’ hand via the Ponzi, so we’re gonna see the ‘mean’ hand brought to bear.”
That’s right, all of it. I have called it “the hard man” of The Central Committee.
The financial fascists, including any so called connections to false instruments, which were in reality diluted or NON-collateral assets (vs. attempted propagandized “collateral” D. O. s), have hoisted the HillaryRomney and the propaganda machine. Worse than the same-other-side.
Preparing here for the “hard-man” Extortion Machine to be shoved into office, “re-distribution” attempt into the fascists coffers.
(And “deflation” = simultaneous corresponding shortgages)
Fine. Now how was that essential to our prosperity?
I think we have tariffs now on sugar. How is that essential to our prosperity today?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.