The deflation with which you are referring is the reverse of devaluation of the dollar through poor monetary policy inflected upon us by the concept of central banking. And I would agree with you with the asterisk that any change of the money supply by central banking is bad for everyone, although not as bad for a group of individuals. Eric On Tue, May 18, 2010 at 3:28 PM, Joshua Zeidner wrote: > > > Deflation is generally not a bad thing for people who save or people who > lend (unless the deflation forces a default). It's a bad thing for people > who borrow. > > -jmz > > > On Tue, May 18, 2010 at 3:23 PM, Eric Cope wrote: > >> As the Austrians point out, deflation in real terms (not inflicted by the >> Federal Reserve) is actually a result of the innovation of the free market >> and the creation of wealth (as individuals create wealth, things become more >> affordable... think of the cost of a brand new technology, like DDR3, as >> time progresses, it comes down). >> So, you are right, we should experience a general deflation as innovation >> creates wealth, making things more affordable for all. (this includes things >> like healthcare). >> >> Eric >> >> >> On Tue, May 18, 2010 at 3:13 PM, Technomage wrote: >> >>> 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. >>> >>> >>> > > --------------------------------------------------- > PLUG-discuss mailing list - PLUG-discuss@lists.plug.phoenix.az.us > To subscribe, unsubscribe, or to change your mail settings: > http://lists.PLUG.phoenix.az.us/mailman/listinfo/plug-discuss >