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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