there was no depression in 1925. "The FED said they could handle that inflation should it happen. (So we can all rest easy.)" "rest easy" is that why prices are up 10X since the depression. incredible the crap people will put on ET. " I would have loved to talk to them about deflation to make my investing decisions easier. " why don't you read books and articles on the subject?
LOL. Please re-read precisely what I said, perhaps it was unclear or poorly written. I agree with you that there are people on this very thread posting crap. I have read many books and articles through the years. If you think I am incorrect in my reasoning, I honestly would love to hear your comments correcting me, since that is how I learn.
It's called leverage, dummy. 2008 ring a bell? Every boom has been followed by a corrective bust since time began. Yet we made it all the way here, some 25,000 years later....in spite of this dreaded deflation, you speak of. How do you explain that, exactly? Shouldn't we all have died out in some mass deflationary extinction 5000 years ago? When humans refused to exchange clay tokens for bronze pots, in the expectation of even lower future prices, and suddenly, we all had no pots or food, then we died?!?! Isn't that how that fairy tale works?!?? Btw, prices are sticky, wages aren't. That's why living standards *decline* with high inflation. But you already knew that? You just work for a bank, or an investment bank, so you're talking your own book. Nothing new.
correct, I can't even find the article I wanted to point to. It was too long to include in the post.. I'll find a way to link to it.. maybe..
There's no need to insult me, first and foremost. I don't remember when I ever treated you disrespectfully. Secondly, can you explain to me exactly how deflation is bad and inflation is good for the banks? Thirdly, your logic doesn't make a lot of sense. We've made it all the way here in spite of many things, like, for instance, the dreaded bubonic plague. Does this mean that bubonic plague is OK, in the grand scheme of things? It's an exaggeration, but you get the idea. Finally, as to prices and not wages being sticky, remember that we're talking about "deflation" here. "Deflation" is defined as a prolonged and widespread fall in prices of goods and services. If you look at what happens during periods of deflation, such as Japan during the 2000s and Hong Kong after the Asian crisis, you'd see that real wages actually fall, i.e. nominal wages fall faster than prices do. And yes, I know that high inflation lowers living standards, but, based on available empirical evidence, the same goes for deflation. Finally, I've said it before and I'll say it again. I DON'T work for a bank or an investment bank or a central bank or any bank (not that there would be anything wrong with it).
[experiences chagrin, discovers true value of permalinks, posts link] http://www.opednews.com/articles/Th...ney-Deflation_Economy_Finance-131214-480.html
Why is it you insist on testing peoples knowledge when you know full well they're right? That condescending attitude is an insult, and one deserves another, yea? We both know full well capital requirements are impacted negatively by declining book values of paper assets (deflation), which is magnified by leverage. So instead of playing dumb, which is dumb in itself and counterproductive to a productive discussion, lets just get on with it? Why don't you answer any of my questions, btw? I asked you a few, yet you want only yours addressed? Why did 2008 happen? Was deflation not a major threat to the banking system? How did humanity not only survive, but thrive in spite of the hundreds, if not thousands, of deflations that have occurred over thousands of years of civilization? Shouldn't we all be dead by now, according to you, Krugman and other deflation scare mongers? I really have to question your knowledge at this point, because it seems to me you lack some basic understanding of economics. Technological and productive improvements allow the creation of cheaper products, over time. Given a static currency value, prices deflate over time. Not inflate. That's how the system is supposed to work. Deflation IS NATURAL and a consequence of technological progress. So to say it's bad, is really silly and dumb. To wit, the context to which your implying (I hope), is that deflation is bad after a bubble - ie after a huge run up in some asset class. IOW, the popping of a bubble is bad. Not progressive technological improvement. Again, your wrong. Take Japan. Their deflation is not a bad thing. It's a normal thing. Their stock market tripled. And real estate prices quadrupled. Prices have to return to original levels before growth can begin anew. That's how it works. That's how it's always worked. Artificially inflating the FIRE sector at the expense of the rest of the economy does nothing but decrease living standards for the whole, while shielding a politically protected class from insolvency of their own doing. Do you not admit that? Or is it "normal" to print Zim notes by the trillion, explode the stock market 10,000%, and then sustain that level, because.....well, a return to original values would hurt the rich? Of course, the middle and lower class get eviscerated, since they dont own any assets. But who cares, right? What exactly is your argument?
I was drawn to that article because it quotes people with good resume's, one is an adviser to the Philly Fed, another had Wall Street experience.. The first graph uses the PCE [which is produced by the Public Sector, maybe something from shadowstats would be way better] https://en.wikipedia.org/wiki/Personal_consumption_expenditures_price_index I've felt that the Fed's struggle from the outset of QE was against deflation and the article makes the case that they are losing the battle. Inflation == borrowers win Deflation == lenders win [if they can keep getting paid], people on fixed incomes win I buy a lot of stuff from Amazon.com, supplements largely, prices are WAY down on supplements over the past few years, ~50-60%...
"Why is it you insist on testing peoples knowledge when you know full well they're right? That condescending attitude is an insult, and one deserves another, yea?" from achilles i disagree with him much of the time but the fact is he can think outside of the box, which is appreciated considering the nonsense and unsubstantiated opinions which pollute ET. use his condescending attitude, as a motivating factor to make your posts more substantial and to the point.