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i don't think people realize that periods of deflation are necessary evil and precursor to healthy inflation and economic growth going forward. by putting lipstick on deflation before it fully plays out as the central banks have done via QE programs, upside growth going forward becomes limited.. ie <2% annual growth as the new normal.
Its the difference between a incredibly established country, and one thats rapidly expanding....and a economy thats reached its potential at that point in time. Its not related to deflation.
Watch China get used to their "new normal" of 7%, and then later 4...then 3. It has absolutely nothing to do with deflation.
This makes no sense. We're not sucking our grandkids monies through a time warp to the past. We're borrowing money from each other now, our kids will owe each other money in the future. Saying we're collectively spending our collective grandkids money is nonsense.
When you are spiraling us into debt you ARE. Money doesn't grow no trees. That money has to be paid back. Live that fiscally responsible life that you preach.
The dollar is losing value as more money is being printed to appease the rich. Wages are stagnant. Prices are going up.
What's going to change to balance out the Economy?
When you are spiraling us into debt you ARE. Money doesn't grow no trees. That money has to be paid back.
No, it doesn't. The debt merely needs to be serviced. There is no annual appropriation of funds to pay off the Treasury securities that mature each month. Instead, Treasury sells new securities and uses the proceeds to finance the retirement of the old ones. In many cases of course, the note-holder remains the same. The reasons why they invested in Treasuries are still just as valid as they ever were, so all they really want is to roll the old notes over into new ones.
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Originally Posted by Gtownoe
The dollar is losing value as more money is being printed to appease the rich. Wages are stagnant. Prices are going up.
LOL! We have a STRONG dollar. Real average hourly earnings are up 2.1% over the past year. The CPI has been barely increasing.
No, it doesn't. The debt merely needs to be serviced. There is no annual appropriation of funds to pay off the Treasury securities that mature each month. Instead, Treasury sells new securities and uses the proceeds to finance the retirement of the old ones. In many cases of course, the note-holder remains the same. The reasons why they invested in Treasuries are still just as valid as they ever were, so all they really want is to roll the old notes over into new ones.
LOL! We have a STRONG dollar. Real average hourly earnings are up 2.1% over the past year. The CPI has been barely increasing.
Your throwing out stats and I'm talking to people and really out here in the Economy.
Your basically telling me debt doesn't matter. Which is a financial no-no. Your basically saying finances don't matter. Hell, why not spend more?
As far as a strong dollar, for whom? The middle class? Do you think they're spending power has decreased or increased over the past few decades?
Deflation is not good. I'm not saying inflation is better, but no one should be hoping for deflation. Wishing for housing prices or gas prices or other necessities to become more manageable is not what deflation is.
Deflation becomes an issue because consumers begin to realize that they can postpone purchases until absolutely necessary or indefinitely. Sure, rent, food, and other needs must be purchased when required, but that's not the main things that keep the economy running. Initially people will buy when they see the initial price drop, but if they begin to notice that prices are continuing to drop, they will hold off purchasing until a better price arrives. So if a product is worth $10 today and consumers think it will be worth less in the upcoming months, then they will hold off on purchasing it until that better price arrives.
Crashing the economy to erase debt is not what we need. Drastic actions do not benefit anyone.
Deflation becomes an issue because consumers begin to realize that they can postpone purchases until absolutely necessary or indefinitely. Sure, rent, food, and other needs must be purchased when required, but that's not the main things that keep the economy running.
Your throwing out stats and I'm talking to people and really out here in the Economy.
Your local Hot Stove League is fine for passing the time of day in idle chatter, It's not good for anything else, and particularly not for actual economic information. You bobbled three balls in a row -- we have a strong dollar, real average hourly earnings are up 2.1% over the past year, and the CPI has been barely increasing at all.
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Originally Posted by Gtownoe
Your basically telling me debt doesn't matter. Which is a financial no-no. Your basically saying finances don't matter. Hell, why not spend more?
I am telling you that because there is no need to, we will never pay off the public debt. Neither will any of the other major economies in the world that are carrying such debt, which is pretty much all of them. What we will do is service the debt -- i.e., make all scheduled payments of principal and interest. That's it.
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Originally Posted by Gtownoe
As far as a strong dollar, for whom? The middle class?
We all use the same dollar.
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Originally Posted by Gtownoe
Do you think they're spending power has decreased or increased over the past few decades?
In 1984, the mean real household income received by the middle quintile (stated in 2014-dollars) was $48,713. In 2014, it was $54,041.
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Originally Posted by Gtownoe
That'll answer your question.
My only question is over how people can be so consistently wrong about everything?
Deflation becomes an issue because consumers begin to realize that they can postpone purchases until absolutely necessary or indefinitely. Sure, rent, food, and other needs must be purchased when required, but that's not the main things that keep the economy running. Initially people will buy when they see the initial price drop, but if they begin to notice that prices are continuing to drop, they will hold off purchasing until a better price arrives. So if a product is worth $10 today and consumers think it will be worth less in the upcoming months, then they will hold off on purchasing it until that better price arrives. Crashing the economy to erase debt is not what we need. Drastic actions do not benefit anyone.
As demand weakens, sales and prices fall and inventories grow. Producers are not able to make payroll. They lay people off and put all possible downward pressure on wages. Even people who still have a job and money start to clam up for fear of a darker future. Everyone becomes a bad credit risk, and the economy just slowly grinds to a standstill.
People who wish for deflation are in a bad way. They have fallen for a populist form of consumerism that simply ignores the fact that we are all just as importantly producers as we are consumers. Such people end up conspiring against themselves, foolishly arguing on and on against their own best interests.
"Low Prices. Always Low Prices!" is the same thing as "Low Wages. Always Low Wages!" Be careful of the people you decide to count on in today's world.
Last edited by Reynard32; 09-30-2015 at 10:13 AM..
Your local Hot Stove League is fine for passing the time of day in idle chatter, It's not good for anything else, and particularly not for actual economic information. You bobbled three balls in a row -- we have a strong dollar, real average hourly earnings are up 2.1% over the past year, and the CPI has been barely increasing at all.
Explain to me what that means for the average consumer and do you have any empirical data to back that up? Where are you getting your statistics from?
I am telling you that because there is no need to, we will never pay off the public debt. Neither will any of the other major economies in the world that are carrying such debt, which is pretty much all of them. What we will do is service the debt -- i.e., make all scheduled payments of principal and interest. That's it.
Whether you pay it off or not are you saying that it is irrelevant? Do you simply see paying the debt off as "out of reach?"
We all use the same dollar.
You said the dollar was strong. Prove it. Relative to where we were at 2 to 3 decades ago.
In 1984, the mean real household income received by the middle quintile (stated in 2014-dollars) was $48,713. In 2014, it was $54,041.
Thanks for proving my point. How much have the rest of our expenses gone up?
My only question is over how people can be so consistently wrong about everything?
Would be even better if you could explain why we need inflation right now in this Economy.
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