To: no-to-illegals
Deflation is far worse because of what it does on the asset value side and the result of that. When you are levered you are paying for that asset in current dollars when the value of that asset is declining. It leads to loans going under water. Creditors calling loans. Defaults. etc. Then it's much harder to sell assets when people expect the price to fall. the overall price level of everything falls including nominal wages. That's why it is often referred to a "deflationary spiral" or some call it a "death spiral". Look at Japan and what has happened to them over the last 20 years. Inflation is much easier to deal with.
Here's a good essay by noted supply sider Jude Wanniski called the Deflation Monster
The deflationary spiral:
To: Wyatt's Torch
Does not inflation eventually cause goods and services to create a similar cycle?
94 posted on
02/07/2014 12:37:01 PM PST by
no-to-illegals
(Scrutinize our government and Secure the Blessing of Freedom and Justice)
To: Wyatt's Torch
my apology ... question should read ... Does not Inflation eventually cause goods and services prices to create a similar cycle if not identical cycle as Deflation?
95 posted on
02/07/2014 12:39:02 PM PST by
no-to-illegals
(Scrutinize our government and Secure the Blessing of Freedom and Justice)
To: Wyatt's Torch
The problem is that you are getting heavy inflation in key sectors that affect everyone (energy, food, other consumables, and other necessities). The only deflation you see is in the housing market and durable goods that are not necessities.
117 posted on
02/07/2014 10:17:49 PM PST by
Thunder90
(All posts soley represent my own opinion.)
To: Wyatt's Torch
Have you read Wanniski’s The Way the World Works?
127 posted on
02/08/2014 5:04:43 PM PST by
1010RD
(First, Do No Harm)
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