How Proud You Must Be of Crooked, Incompetent Biden

[Cheerful Charlie]

Google for deflation in Japan. Japan suffered a long period of deflation that was very destructive to their economy. A textbook example of what deflation is and why it is bad.

 

[Jimmy Higgins]

Not certain how I missed this one.

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There are two words worse than inflation, stagflation and deflation. And as the paper notes, this isn't the only inflation, it only was part of the inflation.

What's wrong with deflation? What's wrong with prices getting progressively lower?

Prices getting lower isn't a problem, the value of currency rising relative to purchasing is. Because it means not spending money is actually a good investment as your money is worth more tomorrow than today. And that sounds awesome!!! Except everyone's money is worth more tomorrow than yesterday, which means economic spending is greatly reduced. Look at Bitcoin. What idiot would spend Bitcoin when it is rising in value from $10,000 to $80,000 a coin?

What was wrong when vcr's and computer's became much cheaper and more affordable?

That isn't monetary deflation. That is supply and demand... and product production becoming cheaper through innovation. Seriously, is that what you thought monetary deflation actually was?

What's wrong with Moores law of faster and better processing at lower cost of production.

Fuck me! Seriously?! No wonder you asked what was wrong with deflation, you haven't the faintest clue what it is.

Deflation is not bad despite what the fed or other egg heads will try to tell you.

*sigh* As anyone that knows anything about deflation and inflation and American history... the typical sod wants INFLATION because when inflation occurs, debt decreases! But inflation does come with a price. Which is why the Fed aims for a small amount of inflation. Encourage growth, but not too much... and eliminate deflation because downward spiral for the economy.

 

[Jarhyn]

What idiot

The guy who wants 10k in blow today, because he can definitely flip that for 80k in whatever hard currency they want, market for BTC be damned.

 

[RVonse]

.

There are two words worse than inflation, stagflation and deflation. And as the paper notes, this isn't the only inflation, it only was part of the inflation.

What's wrong with deflation? What's wrong with prices getting progressively lower? What was wrong when vcr's and computer's became much cheaper and more affordable? What's wrong with Moores law of faster and better processing at lower cost of production.

Deflation is not bad despite what the fed or other egg heads will try to tell you.

Deflation: It makes leaving your money idle a productive investment. This seriously harms investment and thus hurts the economy. Your lack of understanding the complexity doesn't make it go away.

You are wrong and completely forgetting about the monetary value of your own time. Further proof is what actually happened with chips, vcr's, flat screen televisions, etc. Those consumable electronics clearly deflated in price, yet comanded a stable and increasing market. Nor was there ever a shortage of angel or investment capital investing in their future developement. According to you, people would stop buying Apple iphones today since they know iphones are a bad investment because in the future will be found better ones for a cheaper cost.....yet reality shows us exactly the opposite.

As a consumer, I want prices to go down in the future and not up. Because most of the consumables I do purchase are not meant to be investments in and of themselves. They are meant to improve my life TODAY and not tomorrow. I don't use a flat screen tv as a 401k investment. It is meant to be a tool for imporvement of quality of life.

 

[RVonse]

Not certain how I missed this one.

.

*sigh* As anyone that knows anything about deflation and inflation and American history... the typical sod wants INFLATION because when inflation occurs, debt decreases! But inflation does come with a price. Which is why the Fed aims for a small amount of inflation. Encourage growth, but not too much... and eliminate deflation because downward spiral for the economy.

Inflation is only better for good debt on a fixed mortgage and does no good for debt that has no fixed rate. Furthermore inflation is a hideous hidden tax for middle class labor:

1. Your wage increases always following an increase in market pricing. And even if/when your buying power comes close to parity you had....what happens to the amount of taxes you pay to the government? You are now in a higher tax bracket, your effective take home buying power has decreased substantually. The government wins and you lose.

2. If you have a savings account, you are screwed out of the buying power of the funds invested in early years.

But the govenment wins because their debt is worth less.

 

[Copernicus]

.

There are two words worse than inflation, stagflation and deflation. And as the paper notes, this isn't the only inflation, it only was part of the inflation.

What's wrong with deflation? What's wrong with prices getting progressively lower? What was wrong when vcr's and computer's became much cheaper and more affordable? What's wrong with Moores law of faster and better processing at lower cost of production.

Deflation is not bad despite what the fed or other egg heads will try to tell you.

Deflation: It makes leaving your money idle a productive investment. This seriously harms investment and thus hurts the economy. Your lack of understanding the complexity doesn't make it go away.

You are wrong and completely forgetting about the monetary value of your own time. Further proof is what actually happened with chips, vcr's, flat screen televisions, etc. Those consumable electronics clearly deflated in price, yet comanded a stable and increasing market. Nor was there ever a shortage of angel or investment capital investing in their future developement. According to you, people would stop buying Apple iphones today since they know iphones are a bad investment because in the future will be found better ones for a cheaper cost.....yet reality shows us exactly the opposite.

As a consumer, I want prices to go down in the future and not up. Because most of the consumables I do purchase are not meant to be investments in and of themselves. They are meant to improve my life TODAY and not tomorrow. I don't use a flat screen tv as a 401k investment.

Jimmy gave you a good explanation of why price drops in consumer products are not what economists mean by the term "deflation". You are equivocating on the two senses of the word. When products become cheaper to manufacture and sell, causing profits to go up and prices to go down, the value of currency only rises significantly with respect to those products. People's incentive to spend on consumer products generally does not fall because it makes sense to put off purchases. Moreover, technological advances open up new opportunities for economic growth. Deflation is about the value of the currency rising in general, not just on specific products.

 

[Loren Pechtel]

You are wrong and completely forgetting about the monetary value of your own time. Further proof is what actually happened with chips, vcr's, flat screen televisions, etc. Those consumable electronics clearly deflated in price, yet comanded a stable and increasing market. Nor was there ever a shortage of angel or investment capital investing in their future developement. According to you, people would stop buying Apple iphones today since they know iphones are a bad investment because in the future will be found better ones for a cheaper cost.....yet reality shows us exactly the opposite.

As a consumer, I want prices to go down in the future and not up. Because most of the consumables I do purchase are not meant to be investments in and of themselves. They are meant to improve my life TODAY and not tomorrow. I don't use a flat screen tv as a 401k investment. It is meant to be a tool for imporvement of quality of life.

What's good for the consumer isn't always what's good for the economy as a whole.

In deflationary times expect output to drop.

 

[Loren Pechtel]

1. Your wage increases always following an increase in market pricing. And even if/when your buying power comes close to parity you had....what happens to the amount of taxes you pay to the government? You are now in a higher tax bracket, your effective take home buying power has decreased substantually. The government wins and you lose.

2. If you have a savings account, you are screwed out of the buying power of the funds invested in early years.

But the govenment wins because their debt is worth less.

Predicted inflation is factored into interest rates, it doesn't help people. Unpredicted inflation helps lenders and hurts borrowers.

Overall, the best thing is to have neither inflation nor deflation, but the controls aren't perfect, they can't keep it pegged at 0%. However, deflation causes a lot more harm than inflation, in practice they aim for a low level of inflation so that it can swing a bit without going into deflation.

 

[ZiprHead]

Inflation is out of control.

 

[laughing dog]

.

There are two words worse than inflation, stagflation and deflation. And as the paper notes, this isn't the only inflation, it only was part of the inflation.

What's wrong with deflation? What's wrong with prices getting progressively lower? What was wrong when vcr's and computer's became much cheaper and more affordable? What's wrong with Moores law of faster and better processing at lower cost of production.

Deflation is not bad despite what the fed or other egg heads will try to tell you.

Deflation does not refer to reduction of the price of a particular item or even a few items. Deflation refers to a reduction in the general price level.

Properly understood, deflation harms debtors. The famous “ cross of gold” speech by William Jennings Bryan during one of his presidential runs was prompted by the effects of deflation on farming and rural communities (mostly debtors).

 

[Ford]

As a consumer, I want prices to go down in the future and not up. Because most of the consumables I do purchase are not meant to be investments in and of themselves. They are meant to improve my life TODAY and not tomorrow. I don't use a flat screen tv as a 401k investment. It is meant to be a tool for imporvement of quality of life.

And what - exactly - is the GOP plan to fix this should they win in two weeks?

We know what they're planning. The next 2 years of constant bullshit "investigations" into Biden, everyone who sat on the January 6th committee, the FBI, the DOJ, attempts to impeach Biden, Harris, federal judges who ruled against Trump, and I guarantee they absolutely will shut down the government at every opportunity to "own the libs." Oh, and they're going to hang Ukraine out to dry so that their buddy Putin gets to keep at least a little of the land he's stolen.

How does this lower the price of that flat screen TV? How does this translate to lower prices at the pump? How does it do anything other than rile up the idiot MAGA base?

Hint: It doesn't. Inflation is not a "Biden did it" problem. It is global, and has a number of factors involved, including supply chain problems caused by the global pandemic MAGAs think was fake, a major land war in Europe (that the right wants Russia to win), and of course, good old corporate greed. OPEC and our "friends" the Sauds cut oil production to line their own pockets and stick it to the US - without whose near unwavering support they'd be in deep shit - for not bowing and scraping to their King for a change.

Do you seriously think that the oil companies, the food suppliers, airlines, and all the other industries earning record profits due to inflation are going to wake up after a Republican victory next month and say "hey, let's lower our prices now!" Because if you think that, you're a sucker.

 

[TLK Valentine]

Do you seriously think that the oil companies, the food suppliers, airlines, and all the other industries earning record profits due to inflation are going to wake up after a Republican victory next month and say "hey, let's lower our prices now!" Because if you think that, you're a sucker.

Or... if you're sufficiently paranoid, that might be exactly what happens precisely because a few CEOs have made a deal with the GOP in exchange for certain concessions -- or for the GOP looking the other way in the not too distant future.

But one would have to think that the GOP is bobsledding towards full-on fascism to think that they would manipulate private economics to seize and maintain political power...

 

[Jimmy Higgins]

.

There are two words worse than inflation, stagflation and deflation. And as the paper notes, this isn't the only inflation, it only was part of the inflation.

What's wrong with deflation? What's wrong with prices getting progressively lower? What was wrong when vcr's and computer's became much cheaper and more affordable? What's wrong with Moores law of faster and better processing at lower cost of production.

Deflation is not bad despite what the fed or other egg heads will try to tell you.

Deflation: It makes leaving your money idle a productive investment. This seriously harms investment and thus hurts the economy. Your lack of understanding the complexity doesn't make it go away.

You are wrong and completely forgetting about the monetary value of your own time. Further proof is what actually happened with chips, vcr's, flat screen televisions, etc. Those consumable electronics clearly deflated in price, yet comanded a stable and increasing market.

*sigh*

These things went down in price because cheaper ways were developed to make them, cheaper parts, fewer people involved (ie job loss), shorter life span design, innovation. That isn't deflation.

Nor was there ever a shortage of angel or investment capital investing in their future developement. According to you, people would stop buying Apple iphones today since they know iphones are a bad investment because in the future will be found better ones for a cheaper cost.....yet reality shows us exactly the opposite.

As a consumer, I want prices to go down in the future and not up. Because most of the consumables I do purchase are not meant to be investments in and of themselves. They are meant to improve my life TODAY and not tomorrow. I don't use a flat screen tv as a 401k investment. It is meant to be a tool for imporvement of quality of life.

As a consumer, you generally want your dollar to be worth something and the price of objects to be low. Of course, the irony here is that you are a strong proponent of domestic labor and 'bringing the factories back' which would increase labor costs and the price of objects, which would then also lead to the cost of items to increase as well as contribute more to inflation.

The issue with deflation is that the "economy" isn't a today thing. What your dollar is worth today isn't important, it is what it is worth tomorrow that matters most. Inflation encourages people to buy today because tomorrow it isn't worth as much. Deflation discourages people to buy things today because their money is worth more tomorrow. If people aren't buying in a demand based economy, the economy tomorrow is in trouble.

You can feel free to publish a Nobel Prize winning paper that demonstrates the currently unappreciated benefits of deflation though. IIDB could use the glamour of having a Nobel Prize winner being a poster. Of course, we've had lots of potential Nobel Prize winners posting here with their asymmetric or unconventional views which could have revolutionized the science or economics world. They were just wrong though.

 

[Swammerdami]

I don't want to take sides in this discussion but will note that economists' stance on deflation is not as cut-and-dried as implied in the thread. For example

Google for deflation in Japan. Japan suffered a long period of deflation that was very destructive to their economy. A textbook example of what deflation is and why it is bad.

I think most economists will agree that deflation was primarily symptom rather than cause of Japan's economic malaise.

Deflation, like inflation, has winners and losers. Debtors suffer greatly under deflation. Creditors, on the other hand, are rooting for the Fed to stomp out inflation.

Just as with INflation, one must distinguish between PAST deflation and anticipated FUTURE deflation. Smart investors today want to predict the inflation in 2023, not dwell on 2020-2022.

A further complication is that most of the historic examples of deflation occurred when countries were on the gold standard. If the size of an economy doubles today, the central bank will typically arrange for a doubling of the money supply. But under the gold standard this could not happen easily, especially without a very strong banking system. Some of the bouts of deflation in the 1800's resulted from productivity growth, and represented prosperity. From 1815 to 1906 average inflation in Britain was 0.76%, yet productivity almost tripled over this period.

Here's an article titled "Good versus Bad Deflation: Lessons from the Gold Standard Era". But I must be careful not to over-simplify in the other direction.

Instead I'll just close with a tribute to John Pierpont Morgan, a hero whose contribution to American prosperity and financial stability should be better known.

Although Morgan lost $21 million [by rescuing America from the Panic of 1907], and the significance of the role he played in staving off worse disaster is undisputed, he also became the focus of intense scrutiny and criticism.

The chair of the House Committee on Banking and Currency, Representative Arsène Pujo (D–La. 7th), convened a special committee to investigate a "money trust", the de facto monopoly of Morgan and New York's other most powerful bankers. The committee issued a scathing report on the banking trade and found that the officers of J. P. Morgan & Co. also sat on the boards of directors of 112 corporations with a market capitalization of $22.5 billion (the total capitalization of the New York Stock Exchange was then estimated at $26.5 billion).

Although suffering ill health, J. P. Morgan testified before the Pujo Committee and faced several days of questioning from Samuel Untermyer. Untermyer and Morgan's famous exchange on the fundamentally psychological nature of banking—that it is an industry built on trust—is often quoted in business articles:

Untermyer: Is not commercial credit based primarily upon money or property?
Morgan: No, sir. The first thing is character.
Untermyer: Before money or property?
Morgan: Before money or anything else. Money cannot buy it … a man I do not trust could not get money from me on all the bonds in Christendom.

Associates of Morgan blamed his continued physical decline on the hearings. He became ill in February and died on March 31, 1913, nine months before the Federal Reserve officially replaced the "money trust" as lender of last resort.

 

[RVonse]

Deflation, like inflation, has winners and losers. Debtors suffer greatly under deflation. Creditors, on the other hand, are rooting for the Fed to stomp out inflation.

Exactly correct. And in any other sane world, it would be the mandate of government not to have either deflation or inflation. Simply because the free market capital system requires a stable currency for efficient price discovery. In any case it is not the government's job to pick winners and losers (example 2% inflation). IMO Bernanke should have been shot and instead was awarded a noble prize.

 

[Swammerdami]

Deflation, like inflation, has winners and losers. Debtors suffer greatly under deflation. Creditors, on the other hand, are rooting for the Fed to stomp out inflation.

Exactly correct. And in any other sane world, it would be the mandate of government not to have either deflation or inflation. Simply because the free market capital system requires a stable currency for efficient price discovery. In any case it is not the government's job to pick winners and losers (example 2% inflation). IMO Bernanke should have been shot and instead was awarded a noble prize.

While I am exactly correct, you are exactly wrong.

As I hinted at in portions you snipped, it is essential to distinguish between ANTICIPATED changes in the value of money, and changes that come as surprises. The Fed's target of 2% inflation is an example of ANTICIPATED change in the value of money. As such it is benign. Borrowers generally pay 2% higher interest than they otherwise would, creditors get 2% more, exactly compensating them for the depreciation of their capital. The collateral for a loan may appreciate by 2% more nominally than without inflation. There will be a 2% average upward thrust on wages and pensions, often codified into contract.

The advantage 2% has over zero is, in a word, FLEXIBILITY. As just one example, the Central Bank sets the nominal interest rate for risk-free overnight money. This helps control the availability of money and the level of economic activity. With 2% inflation, the Fed can set a real interest rate of MINUS 2% by pegging the nominal rate to zero. It has acted to set negative real rates thrice in this century, and in each case succeeded in reducing the length of recession. Without inflation there is no easy way to set negative real interest rates.

 

[laughing dog]

Deflation, like inflation, has winners and losers. Debtors suffer greatly under deflation. Creditors, on the other hand, are rooting for the Fed to stomp out inflation.

Exactly correct. And in any other sane world, it would be the mandate of government not to have either deflation or inflation. Simply because the free market capital system requires a stable currency for efficient price discovery.

The 2% target for inflation is based on the fact that all statisical measurements are flawed so that they tend to overstate the effects of inflation. At the time, 2% was chosen because it was thought that the most commonly used statistical measures overstated the effects by about 2%. In otherwords, the 2% statistical goal was equivalent to a 0% accurately measured goal.

In any case it is not the government's job to pick winners and losers (example 2% inflation). IMO Bernanke should have been shot and instead was awarded a noble prize.

Any government policy that affects the economy picks winners and creates losers. Mr. Bernanke was not awarded his Nobel prize for his time as the chair of the Federal Reserve but for his contributions to economic theory as a professor.

 

[barbos]

Shitty sound bites taken out of context?

What context do you need? Seriously. Rest assured, if ever you think that your side is perfect and only the other side is bad, you're wrong. No party has a monopoly on bad.

It's duopoly of Bad.

 

[barbos]

Seriously? Shitty sound bites taken out of context? Also, Republicans agreed unanimously that Russia interfered in the 2016 election. Proven, in fact.

LOL, yeah, they did. They said Russia helped .... Clinton

 

[ZiprHead]

Seriously? Shitty sound bites taken out of context? Also, Republicans agreed unanimously that Russia interfered in the 2016 election. Proven, in fact.

LOL, yeah, they did. They said Russia helped .... Clinton

Are your eyes brown cuz you're, well... Full of it.