I have heard others say the bigger problem is DEFLATION for at least the last 6 years. I have yet to see it materialize or find anyone who says this able to explain the statement.
I am not arguing one way or another but hoping to find an explanation. I sure have not seen any DEFLATION of anything but the value of our dollar.
Please see my post #29 on this thread asking about money supply and velocity.
Let's start with this point.
1. Imagine Sequoyah is a barber and Alberta's Child is a landscaper.
2. You have $1 in your pocket. I have $1 in my pocket. There are no other people in this world. The "money supply" in our economy is $2.
3. You charge me $1 for a haircut. I charge you $1 to cut your lawn.
4. I get my hair cut once a month. You get your lawn mowed once a month. This means you have $12 in annual sales (12 x $1) and I have $12 in annual sales. The total GDP of our economy is $24. That means the $2 in "money supply" has facilitated $24 in annual business activity.
5. Now suppose I have concerns about my finances, so I stop getting my hair cut every month. I go to you for a haircut every other month, and cut my own hair every other month. Since your income has been reduced, you respond by letting your grass grow a little longer and only paying me to mow it every other month. So now you have $6 in annual sales ($12 x 6) and I have $6 in annual sales.
6. The end result of Item #5 is that we have the same money supply ($2), but there is only $12 in business activity instead of $24. The VELOCITY of the money has slowed considerably -- because it's changing hands less frequently.
7. Now imagine what would happen if I stuck my dollar in my mattress and cut my own hair every month. And you decided to mow your own lawn. In this scenario, we have the same money supply of $2 but NO velocity of money because we aren't conducting any business with it.
1. Population growth (more people buying products and services)
2. Productivity growth (people producing more products and services with the same expenditure of time/money)
If you have both of these in place, the economy grows strongly. If you have one but not the other, the growth is weak or even non-existent. If you have NEITHER, the economy doesn't even stagnate; it SHRINKS.
U.S. population growth has been small for years now.
I would make the case that U.S. productivity "growth" is negative.
Put those two together, and you have all the ingredients for a major decline in demand for products and services. That's a classic deflationary environment.
They’re deflating alright, anyone but their pockets.
87k agents to make sure.