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 <
technomage.hawke@gmail.com>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.
>
>
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