Posted on 10/03/2013 3:17:32 AM PDT by Mozilla
“At what point do we call what is happening a Depression?”
About two months after a Republican is elected president.
The hike in bacon prices, at least, is being caused by a virus, PED, that's kiling piglets.
It also means that every asset decreases in value, the real value of debt increases and commerce slows to a crawl as everyone knows that waiting to buy something means they'll get it for less. Businesses produce less, wages fall, demand falls and prices fall further. It becomes a deflationary spiral to complete collapse. Even Hayek thought deflation was a Very Bad Thing.
I’m sure that’s a part of it, but from $1.49/lb to $8.79/lb is much more than the 14% the article cites. Fuel, feedstuffs, pre-finish antibiotics, labor and many other costs along the way, have likely contributed to it, as well.
“Just a country girl, here, but what is an illegal apartment?”
Illegal apartments are added to usually one- or two- family houses without permits or knowledge of the municipality. Since Americans don’t have families anymore in northern NJ, many are living in homes with astronomical taxes and more space than they need. They add apartments on their own, so you end up in a one-family neighborhood with ridiculous parking problems and the value of your home falling by the day due to the de facto ghettoization of your street. No additional revenue is raised by the municipality for the new children showing up in the schools, and no taxes are paid on the cash rents collected. The giveaway is the one-family house with three doorbells and mailboxes.
Many of these are used by illegals; a few years back there was a fire in one such place near the George Washington Bridge, and it turned out the basement had been partitioned into rooms for rent. People from three different countries were living in the rooms, and their legal status was never disclosed. A landlord was arrested after firemen died fighting a fire in one; they got lost in a maze of added construction done for the same purpose.
This is the “new normal”; people from the slums of Rio come here and live like they are in the slums of Rio...
But if the purchasing power of the currency has increased then the value has only dropped nominally. The money received from the sale of the asset will buy more than previously.
the real value of debt increases
That is true. During a secular deflation, one would only go into debt if the project will pay off more than the rate of deflation.
and commerce slows to a crawl as everyone knows that waiting to buy something means they'll get it for less.
That's an unproven fallacy. Perhaps you should tell chip-makers and computer manufacturers that the secret to increasing sales is to raise the price of their products rather than lowering them.
Businesses produce less, wages fall, demand falls and prices fall further. It becomes a deflationary spiral to complete collapse.
See above: fallacy
Even Hayek thought deflation was a Very Bad Thing.
Hayek was speaking of the deflation I mentioned in my comment: the disastrous result of a government-sponsored central bank's yanking the rug out from under the boom it created in the first place by lowering interest rates too high.
But deflation is not always bad. If it results from a stable currency and productivity improvements, it should be welcomed -- not feared.
Reduced price of one commodity or another due to competition or efficiencies in production is not deflation.
During a secular deflation, one would only go into debt if the project will pay off more than the rate of deflation.
The problem is existing long term debt, such as mortgages and bonds.
See above: fallacy
We don't really know, since deflation on that scale has never happened, but the Great Depression came pretty close to meeting that description.
Of course, it is. It's exactly what you're worrying about. Prices dropping.
We don't really know, since deflation on that scale has never happened, but the Great Depression came pretty close to meeting that description.
We do know. From about 1870 till the start of WWI, the US [and the rest of the developed world] was on the classical gold standard. Prices dropped about 1%/year during the period. Economic growth was very strong.
but the Great Depression came pretty close to meeting that description.
This is the third time I'm saying this: deflation caused by government action [raising interest rates after a government-caused fake boom] is bad. Deflation caused by a stable currency and improvements in productivity is good.
You made a blanket statement that deflation is bad. I've been trying to point out to you that it's the cause of deflation that's the issue -- not deflation itself. Why are you fighting me?
> At what point do we call what is happening a Depression?
About two months after a Republican is elected president.
Good one...lol
if there is inflation, our property, our food stuffs, our vehicles, our tools, etc should also be more valuable....at least I hope so..
right now we're in stagflation.....
can you drive across the border for the day and buy Canadian mapleleafs?....will they ask you about them at the border and will there be extra tax because of it?...anyone know let me know, thx....
my liberal obama dtr and her husband told me they are shopping for a freezer and they already have bought a ton of extra rice, flour, sugar and even bought food grade buckets for them.....part of it is they want to be urban self sufficient....proud of them,but they don’t realize they are also understanding the conservative prepping attitude...
I have heard that from many people. I am beginning to think that people moving to the exurbs or rural areas have the right idea.
“No one uses cash anymore.”
Speak for yourself, everyone I know uses cash every day!
This scenario is exactly correct. When the US Government prints $85 billion out of thin air and buys "toxic assets" with it, all that money does is (a)Sit in the Banks and (b)Free's up the capital that was invested in those toxic assets for some other purpose.
The problem is: the "freed capital" isn't going anywhere and what the Fed has done by printing $85 billion/mo. out of thin air is to simply dramatically increase the printed money supply.
There's NOTHING to back up that money, it's all PERCEPTION. The only reason we do not have hyperinflation now is because interest rates are still at historical lows and the inter-bank lending rate is near 0%.
Add to that, America has become a SERVICE economy, so what do we physically make here? Not much really. Automobiles are sourced from all over the world, "American content" in an American brand car (GM, Ford -- skip Chrysler they're foreign owned) is at historical lows. Engines, Transmissions, electronic components are all made overseas, they're simply "assembled" here.
Hyper-inflation won't come with rising interest rates (here's where I disagree with the author) mostly because Americans are still shoveling out from mountains of debt, and once they become debt free they're not typically resuming the spending habits that put them in mountains of debt in the first place.
It's actually become chic to SAVE MONEY, get out of debt and live below one's means. My wife and I have been like that for our 27 years of marriage. Most folks we know that have gotten out of debt are starting to live like we are (below their means, saving money.) I personally do not think this country is going back to its heydays of retail consumers driving the economy. That may be our only "saving grace" to avoid hyper inflation.
When you think about it, one of the core causes of hyper inflation is caused by too many dollars chasing too few products. If America doesn't go back to consuming more than it can afford to pay off, that may by itself stave off hyper inflation.
Personally, I'd love to see interest rates go up .... a return to the days of Carter and 18-21% savings and CD interest rates would suit me just fine. I have plenty of cash sitting on the sidelines and I'd love that rate of return!
I don’t know but why would you do that?
Just buy them from APMEX or another dealer
How much inflation did the nation see after we downsized the government at the end of the First World War?!
Absolutely.
Deflation is now a far larger threat.
Thanks - I was beginning to think sanity was entirely absent from this thread.
Hyperinflation is a political phenomenon - not an economic one. It has nothing to do with the increasing price of bacon. It happens when a Robert Mugabe takes over a country. Not that Obama doesn't have similar inclinations, but there are still many, many barriers between him and the realization of his petty tyrannical aspirations.
Deflation due to technological advances is still the global macroeconomic trend in place, despite price increases in some categories due to political meddling and wacky environmental policies.
Don't believe it? How much has your salary inflated lately? When they come to you one day and offer you twice as much just to stay on, you can start worrying about the onset of hyperinflation.
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.