Masses expect inflation, masses are always wrong = deflation coming?

Discussion in 'Economics' started by crgarcia, May 17, 2010.

  1. Interesting links, but a little opinionated, IMHO.
    I agree on principle, but the example of PC is really out of road: there are technical and economic reasons because chip cannot be compatible each other between different generations (I'm engineer and a technical marketing manager in a IT company, I know what I'm saying). I agree that sometimes (rarely) this is for marketing segmentation reasons, but in ITC market this is a practice cannot be used often, the market is too competitive and too swift. Moreover, differences are often due to revolutions in performances (as someone said, if car motors advanced at the same speed of microchips, we should all drive cars that fly at 3 times the speed of sound and cost less than 1000$).
    About fashion, I completely agree. But changing people is more difficult than introducing a new technology.

    Not all profits are the culprit, IMHO. You should divide them in two: creation and distribution. When you create more wealth (for example, you find a new way to use resources more efficiently) your profits are well due (if they are less than real value of your innovation) because the whole system profits.
    When the game is a zero-sum game, should be no profits to who move money from poor or weak to powerful and rich.
    IMO, of course.
    About banks and commercial, I believe they could produce something (but today they cost more than they produce, as you notice). Bank should aggregate savings and move (lending) to innovators. Their useful work is aggregation (many little savings used as a big sum) and more than that identification of opportunities (find the innovators, find who have less risk).
    Commercial should simply identify best products and channel them to people (expertise). This is another useful work.
    If their work will survive at internet revolution I don't know. But it is more interesting to know if it will survive at their misuse of their power.....
     
    #21     May 18, 2010
  2. Interesting. Could you suggest any paper about this? I mean any text clue that it is really this process the root cause (or one of root causes) of hyperinflation...
     
    #22     May 18, 2010
  3. To my knowledge no academic has so far understood hyperinflation. In the literature it's either described as caused by an expansion in the money supply (Friedman and the monetarists) or just a bad case of inflation (pretty much every other school). Both are wrong. The only law that approaches the real cause is Gresham's law. Gresham correctly observed that as a currency is debased (the gold and silver content decreased in coinage) that people start to hoard coins of a greater purity. If hyperinflation is viewed from that perspective then it becomes clear that it's not really inflation after all, it's a form of deflation. People are hoarding things that maintain value (be it gold or dollars, as was the case in Latin American countries) and as a result trade collapses and the value of everything decreases relative to the stuff that's being hoarded. Only when measured against the currency that everyone's trying to get rid of will you see prices increase.
     
    #23     May 18, 2010
  4. DT-waw

    DT-waw

    here's another indication we will NOT have hyperinflation.

    during the last two years U.S. printed the largest amount of money ever in the history.

    where's the inflation?

    since 2002 the median sales price of new homes rose from
    $187k to $214k in March 2010
    thats about 15% increase in 8 years or only 1.7% per year!
    http://www.census.gov/const/newressales.pdf


    In U.S. there's probably MUCH more housing capacity than the real needs of its residents. In Spain, there are about 2 million empty homes!
    How can prices rise in such conditions?

    Currently you can have mobile internet device with brilliant screen, lightweight,all day battery life for $499. Remember how much ultraportable Sony or Toshiba laptops costed 5-7 years ago? $3,000
     
    #24     May 18, 2010
  5. stagflation.

    not something in the keynesian playbook
     
    #25     May 18, 2010
  6. thýs thread ýs useless

    why? because hyperýnflatýon ýs ýmpossýble ýn US

    why? because government can prýnt as much as they want wýthout creatýng ýnflatýon

    why? because more than 80% of USD ýs used ýn overseas

    why? because USD ýs the reserve currency and there ýs no other country/currency capable of replacýng ýt not that US economy ýs strong but there ýs no stronger

    Thus hyperýnflatýon ýs IMPOSSIBLE
     
    #26     May 18, 2010
  7. morganist

    morganist Guest

    have you just got off the train from 1580?
     
    #27     May 18, 2010
  8. Careful what you wish for...

    Deflation is worse than inflation.
    Lower prices are useless if you don't have a job.

    The masses on main street will never hedge (i.e. with gold as you suggested), as they are too indebted.

    Also the masses in Wall Street are mostly wrong.
    They read about inflation and they take it as a dogma.
     
    #28     May 19, 2010
  9. there was no amerýca ýn 1580

    as far as I know
     
    #29     May 19, 2010
  10. morganist

    morganist Guest

    what are you using that silly font.
     
    #30     May 19, 2010