I am a deflationnist...

Discussion in 'Economics' started by SNBthetrue, Oct 19, 2010.

In-De-Flat ???

Poll closed Jan 27, 2011.
  1. inflation is good

    2 vote(s)
    9.1%
  2. deflation is good

    12 vote(s)
    54.5%
  3. flat is better !

    8 vote(s)
    36.4%
  1. I can't believe all of the niave people on here claiming deflation is good, temporary, healing, etc...

    How far in debt is the USA? They will be hard pressed to pay that back in an inflationary period let alone deflationary...

    Think of the big picture, and the trickle down effect of soverign default, rather than how much your $10,000 in savings are now worth.

    One simple example. Deflation takes hold. All of a sudden that company you work for is making less revenue and less profit. Do you think they will be more inclined to hire more employees, or lay them off? You think the unemployment rate is bad now?

    There is a reason central banks target an inflation rate of ~0%-2% around the world.
     
    #11     Oct 19, 2010
  2. PaulRon

    PaulRon

    An increase in the value of currency helps everyone that uses that currency because it increases their purchasing power. How is that a bad thing?
     
    #12     Oct 19, 2010
  3. MKTrader

    MKTrader

    There was actually a lot of deflation during some of the best economic years in the U.S. -- before the Fed came into existence and/or got heavily involved.

    Again, deflation is little more than boogey man and a huge monkey wrench in the modern monetary scheme of things.

    Like everything in economics, there are trade-offs, good and bad, with deflation.
     
    #13     Oct 19, 2010
  4. +1

    Inflation and deflation are both equally bad and are the result of fiat (non-PM backed) currency.

    The current residential real estate market is a perfect example of deflation. Home prices are declining, which is bad for people with real estate debt because the declining price of their home may become less than what they owe on the mortgage. However, deflation of home prices is great for real estate investors with cash because they can purchase homes inexpensively.

    Conversely, inflation is bad for seniors with some savings who are living on a fixed income. They have money, but its value keeps declining so it buys less and less. Inflation is great for people with debt and a job providing periodic pay-raises. As their pay increases along with inflation, their debts seem less and less, unless they keep accumulationg more debt.

    The only way to eliminate boom/bust inflationary/deflationary periods is to back money with a real asset such as gold/silver.

    To better understand how this works, read The Creature from Jekyll Island.
     
    #14     Oct 19, 2010
  5. Deflation is TEMPORARILY bad for some (especially government and overly leveraged borrowers)... but healing and rejuvinating in the long run. Inflation is PERMANENTLY BAD FOR EVERYBODY IN THE LONG RUN.

    We would have neither inflation nor deflation if the government didn't practice deficit spending. Having the currency backed by gold can "hold the government's feet to the fire" about deficits... that's why gold-backing of the $USD was discontinued.. the Federal government wanted to spend excessively without being held accountable.

    The only things deflation "harms" are those which never should have been inflated in the first place.

    INFLATION = DESTROYER OF WORLDS!!!!
     
    #15     Oct 19, 2010
  6. Buzzed

    Buzzed

    Connect the dots.

    Deflation in any market equals more sales.

    More sales equals more tax revenue.

    More tax revenue combined with deflation equals a balanced budget.

    A balanced budget equals long term financial security.

    Financial security equals job security.
     
    #16     Oct 19, 2010
  7. It is bad if you force it by having the money supply fixed to create deflation.

    If left to the market on commodities backed currency then it is not.
     
    #17     Oct 19, 2010
  8. PaulRon

    PaulRon

    Absolutely
     
    #18     Oct 19, 2010
  9. Wrong, wrong, wrong. If the cost of a house is declining every month, are you going to buy one now or wait? If the cost of a car is declining every month, are you going to buy one now or wait?

    If everyone is waiting to purchase items because prices continue to decline, this inherently lowers the value of the goods in question. Hence the deflationary spiral.
     
    #19     Oct 19, 2010
  10. So you would tie our prosperity to a metal??? To the mining industry???

    NUTS!!!! Sounds like those guys from the mises.org

    CURRENCY BACKED BY A BASCKET OF DIVERSE COMMODITIES.

    There the market will determine the necessary amount of currency in circulation.

    Why is ECO 101 so hard to grasp???

    :mad:
     
    #20     Oct 19, 2010