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Old 03-03-2015, 05:35 PM
 
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Because individuals did not chase but saved and paid off debt. Companies didn't really invest but held back cash and bought back their own stocks.T hey were able to meet demand with less people.
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Old 03-03-2015, 11:57 PM
 
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Quote:
Originally Posted by ContrarianEcon View Post
It was the oil boom that made the difference.
It is still in trouble. Too much debt and not enough income.
The FED did a lot. But we need the wages to pay for the debt.

A safe bet. We aren't in for inflation until the debt in % of GDP comes down. And that is very painful economically.
The oil boom helped eventually, but did not even take hold economically until a few years into the FED intervention. Actually really kicking into gear around 2012. Though it certainly was pivotal. It was the early intervention that really made the difference in investor, corporate and individual confidence.
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Old 03-04-2015, 12:12 AM
 
Location: Sector 001
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What the global economy could use is some inflation... inflation can be a good thing.. it dilutes the value of debt and makes it easier to pay off. The average joe is in debt. Most governments are in debt. People who own a home have debt... inflation makes the house easier to pay off.

With proper positioning of assets you can partially protect against inflation though the government is going to want their cut of your 'gains' ... really inflation hurts the rich the most as they have the most to lose.

Deflation helps those with cash.. inflation helps those with debt.

Right now the main thing inflating is asset prices because the rich have so much money to throw around. Real wage inflation and across the board price inflation would be beneficial. The average joe has basically been priced out of the biggest cities which are reserved for the globally wealthy...
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Old 03-04-2015, 12:39 AM
 
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Originally Posted by markg91359 View Post
My answer is that few people realize what a dramatic shock the recession of 2008 really was. The economy dove into the worst tailspin it had been in since the Great Depression. A Depression was only averted by: 1. Quantitative Easing; 2. TARP; and 3. the Fiscal Stimulus passed by Congress.

At the time, there were a lot of whiners who said it would be the ruination of the country. Wrong. Its what kept the entire banking and credit system from collapsing.

In any event, the collapse of the real estate market sucked a lot of dollars out of the economy. Government was the only entity that had the power to fix what was wrong.

Inflation is naturally less of an issue today because of things like foreign competition, the information economy, and the decline of unions.

I predict there will be no significant inflation for years.
I would agree with all of this. More specifically, I believe the reason normal inflation is muted has a lot to do with consumers (and banks) holding back on spending and minimal wage growth. Perhaps, a new norm vis-a-vis globalization as you allude to.
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Old 03-04-2015, 08:49 AM
 
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Originally Posted by stockwiz View Post

really inflation hurts the rich the most as they have the most to lose.
The rich depending on their ownership, business and/or investment holdings might lose the most in terms of actual dollars inflated away. Or not. But if you're rich, you have more money than one needs to live a comfortable life, so 'hurts' in their case is on paper.
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Old 03-04-2015, 12:18 PM
 
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Originally Posted by stockwiz View Post
Deflation helps those with cash.. inflation helps those with debt.
Inflation helps those that get their hands on the new money first, it hurts those that get their hands on it last.

Deflation helps those with fixed incomes. As long as the income lasts.

I'd rather have 20% inflation than 2% deflation for any length of time. Particularly if you lead inflation with the minimum wage.
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Old 03-04-2015, 12:23 PM
 
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Deflation vs. inflation is not even debatable. Deflation is the eventual end of the economy.
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Old 03-04-2015, 01:12 PM
 
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Originally Posted by ContrarianEcon View Post
Inflation helps those that get their hands on the new money first, it hurts those that get their hands on it last.
Who gets it 'last' and who does the money 'hurt'?
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Old 03-04-2015, 01:17 PM
 
Location: USA
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The thread title only caused me to wonder what Queen Elizabeth has to do with inflation?
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Old 03-04-2015, 01:37 PM
 
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Originally Posted by Hoonose View Post
Who gets it 'last' and who does the money 'hurt'?
The FED prints some money by loaning it out. Big banks and big businesses get the cheapest rates. Smaller banks borrow from the bigger banks. Smaller businesses borrow from the smaller banks. Smaller people borrow from the smaller banks.

So who gets their hands on the money last? the minimum wage workers and those on fixed incomes.

The money hurts by driving up the cost of food and energy, health care, insurance, rent etc. Wages lag these things and those on fixed income lag these things.
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