On 5/17/10 4:13 PM, Joshua Zeidner wrote:
>
>
>   you might see some kind of short term deflation, but any substantial 
> deflation would break us.  Any time you have debt, then deflation 
> makes that debt harder to pay.  Not only would it be tragic for 
> Americans on a personal level, but on a state and federal level it 
> would be equally disastrous.  eg. What would happen if everyone's 
> salary were halved next week?  Massive default on mortgages, housing 
> inventory increases, values go down, etc.  I would think that 
> deflation might be beneficial, I just don't think its an option 
> (either financially or politically).  Most likely they will just print 
> their way out of this, and destroy the dollar in the process.
>
>   -jmz
>
I have been reading through this and as someone who has an accounting 
background (thank you GCC),
you all have not mentioned one important fact: the rate at which 
deflation could (or would) occur.

A low rate (say under 2% would have minimal effects on the economy in 
the very short term, it would
start making life a litte more difficult with time, but not 
substantially so. IF, however, the rate if deflation went up
or varied wildly over the long term, yeah,, I could see the above 
scenarios coming to pass.

The biggest problem with have in this country is a lack of personal 
responsibility for ones own actions
(including incurring debt). we need to be a lot more responsible and we 
need to force the states into
doing so at their level. 5 years ago, Arizona had 2 billion in excess 
cash set aside (call it a rainy day fund).
the politicians couldn't leave well enough alone and now here we are, 
suffering a 2.1 billion dollar shortfall
for this year alone. California was living on borrowed time ever since 
gray davis started as governor.

Personally, I have gotten rid of all my credit cards (can't have them 
anyone living on a disability income),
I am paying down any debts I have left (just over $3,000 at this point) 
and will be debt free in 3 years.

I view credit as nothing more than a company selling you the money you 
borrow (debt) and then charging you
monthly to be able to use that money. it isn't yours. its a legal scam IMHO

anyway, my point is this: deflation might actually be a good thing for 
this country, if and only if, it can
be held to a minimum level for as long as possible.

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