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 <
eric.cope@gmail.com> 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 <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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