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Old 10-08-2018, 11:08 AM
 
7,283 posts, read 8,120,225 times
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Quote:
Originally Posted by Thatsright19 View Post
I like how you pretend deflation is some desireable outcome. It’s destructuve and will be avoided. Part of the feds mandate is price stability. They aren’t going to allow protracted deflation. No central bank would.


But oh yeah, the economy has been dead for 20 years as we all go on living. They can’t keep the U.S economy boeyed? They’ve been doing it for decades. Even long before the dreaded 2001 you reference. Oh the fed stepped in in 2001 and 2007. Guess what? They’re going to step in in the future to smooth over bumps in the road. That’s what they are designed to do. Oh and they can’t “run out” of money in the future. The fed is the serpent eating its own tail until which point the USD is dethroned and that isn’t happening without another world war.
The hard truth is deflation really is the boogieman. It's is the sum of all economic fears.
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Old 10-08-2018, 11:14 AM
 
64,605 posts, read 66,129,695 times
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not when you have no skin in the game like our mr c2bp
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Old 10-08-2018, 12:08 PM
 
731 posts, read 400,517 times
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Quote:
Originally Posted by Thatsright19 View Post
I like how you pretend deflation is some desireable outcome. It’s destructuve and will be avoided. Part of the feds mandate is price stability. They aren’t going to allow protracted deflation. No central bank would.


But oh yeah, the economy has been dead for 20 years as we all go on living. They can’t keep the U.S economy boeyed? They’ve been doing it for decades. Even long before the dreaded 2001 you reference. Oh the fed stepped in in 2001 and 2007. Guess what? They’re going to step in in the future to smooth over bumps in the road. That’s what they are designed to do. Oh and they can’t “run out” of money in the future. The fed is the serpent eating its own tail until which point the USD is dethroned and that isn’t happening without another world war.
I believe the economy expands for certain number of years and contracts for certain number of years. So, DEFLATION is an integral part of this picture. We need deflation because we need to regularly unwind debt inflations, we need to re-strengthen our currency, we need safe investment through SAVING (not absolutely, but periodically) and we NEED to periodically destroy prices, lower them so that people can afford housing, education, medical treatment, transportation....much of our homeless problem stems from the global hoarding of real estate (a product of ZIRP) and the inflation of rents and mortgages which have driven the masses out of the housing markets, many into the streets.

Day = Inflation / Growth / Sun / Spending Season
Night = Deflation / Rest / Moon / Saving Season
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Old 10-08-2018, 12:22 PM
 
731 posts, read 400,517 times
Reputation: 1087
Quote:
Originally Posted by EDS_ View Post
The hard truth is deflation really is the boogieman. It's is the sum of all economic fears.
We are afraid of deflation and depression because it is a kind of death; and we don't like to talk about death. Deflation and Depression is a very difficult experience. But it is a cyclical thing. Is it a good thing, deflation? It is a necessary thing. Deflation lowers prices, explodes the global debt bubble, and saves the local currency, encouraging the investment season of SAVING.
There are two investment seasons: SPENDING and SAVING. The FED tried to pervert this law of nature; and now they are starting to see the truth of it.
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Old 10-08-2018, 12:30 PM
 
2,242 posts, read 1,388,386 times
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Of course we’re afraid of deflation. It’s pretty much the worst case scenario. It’s to be avoided just as we would for hyper inflation. The feds dual mandate can’t be met when deflation is present. Deflation would be an abject failure of their responsibility.

You make it sound like inflation is automatically evil. It’s generally accepted that ongoing inflation is desired by central banks.

Welcome to modern money.

And the fed isn’t preventing savings....people save and invest everyday. They grow their money in countless different paths.

If youre complaining about a savings account paying more...it probably pays the same as it always did adjusted for inflation. People always talk about the good ole days when their savings account paid 10 percent plus in the early 80s....but what was the inflation rate? As far as I see it, savings accounts never paid....and why should they? There’s very little risk. Wether the fed rate aka the risk free rate is 1 percent or 20 percent, you are doubtful to get any real return.

Last edited by Thatsright19; 10-08-2018 at 12:55 PM..
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Old 10-08-2018, 02:39 PM
 
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Amazing that in the 70's, here in San Diego, people were jumping on mortgages advised by brokers "before rates jump to two digits" I'm sure we'll get that way again....but maybe not in my lifetime?
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Old 10-08-2018, 02:59 PM
 
Location: Vienna, VA
204 posts, read 105,093 times
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Quote:
Originally Posted by C2BP View Post
I believe the economy expands for certain number of years and contracts for certain number of years. So, DEFLATION is an integral part of this picture. We need deflation because we need to regularly unwind debt inflations, we need to re-strengthen our currency, we need safe investment through SAVING (not absolutely, but periodically) and we NEED to periodically destroy prices, lower them so that people can afford housing, education, medical treatment, transportation....much of our homeless problem stems from the global hoarding of real estate (a product of ZIRP) and the inflation of rents and mortgages which have driven the masses out of the housing markets, many into the streets.

Day = Inflation / Growth / Sun / Spending Season
Night = Deflation / Rest / Moon / Saving Season

Homes going down in value causing people to foreclose and lose their home should do real wonders for the homelessness problem. The first to lose are the lower income people, who buy in less desirable areas using FHA loans.
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Old 10-08-2018, 03:35 PM
 
Location: El Pueblo de Nuestra Señora la Reina de los Ángeles del Río Porciúncula
13,552 posts, read 14,051,705 times
Reputation: 9663
I think the biggest problem is that the government won't keep its hands off the economy. They deliberately adjust the prime using as sort of a throttle and brake, and that QE stuff is just crazy.

The biggest mess of all (that I recall, and recently) was when Sen. Frank and I forget who else, deliberately loosened the mortgage qualification criteria, letting people buy houses with only a few percent down payment. People began buying even multiple houses, speculating since having such a low down payment accelerated housing prices. That was the bomb. The fuse was lighted when financial institutions began bundling mortgages and sold the bundles as derivatives. That last straw removed any incentive for lenders to not make crazy loans to people who couldn't afford the houses. Eventually the housing market couldn't sustain the huge housing prices and a few then many loans failed. The avalanche began and the cascades dumped massive numbers of houses into foreclosure. The housing bubble collapsed. That caused the recession of 2007-2009. And the government's solution? They bailed out the banks.

I still think lending is too loose, and I would like to see the regulations changed to increase the minimum down payment to something more than a few percent. Oh and what's worse, sellers are often asked to contribute to buyer's closing costs, and I'm not sure but I suspect some people are buying houses with nothing more than a fair credit score. I'm pretty sure the derivatives have been prohibited. If it were up to me I would force lenders to slowly raise the minimum down payment (to avoid shocking the housing market) up to maybe 10% minimum down payment. That would restrict house sales to mostly people who have good personal financial skills. I think that's about what it was before this craziness started. The buyer should be forced to show that 10% in available cash.

I'm not buying the idea that every American should be able to own a house. Every American has the right to earn enough money to buy a house, but the government shouldn't just keep lowering the criteria until a hamburger flipper supporting a family of 4 can afford a house.

I may be wrong but I think the government should quit messing with the economy and let the free market establish prices and interest rates. The government was responsible for creating the housing bubble and they were responsible for creating a situation where the bubble eventually had to burst.

I lost my career in 2007 because of the recession. Fortunately I had no mortgage so all it affected was the paper value of my house, but I didn't sell it until several years later when the market had mostly recovered. And I had to get into a different line of work. I started my own business and I've been a sole proprietor ever since.

I think the government is responsible for much of the instability in housing prices and in our economy in general. They just can't quit meddling and they're playing with dynamite.

But anyway as long as the current economy stays the course we will see continued rises in lending rates and in the cost of money. Only savers will benefit from higher interest rates, and savings is a really dumb way to store any but small amounts of money.
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Old 10-08-2018, 04:08 PM
 
7,283 posts, read 8,120,225 times
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Quote:
Originally Posted by C2BP View Post
I believe the economy expands for certain number of years and contracts for certain number of years. So, DEFLATION is an integral part of this picture. We need deflation because we need to regularly unwind debt inflations, we need to re-strengthen our currency, we need safe investment through SAVING (not absolutely, but periodically) and we NEED to periodically destroy prices, lower them so that people can afford housing, education, medical treatment, transportation....much of our homeless problem stems from the global hoarding of real estate (a product of ZIRP) and the inflation of rents and mortgages which have driven the masses out of the housing markets, many into the streets.

Day = Inflation / Growth / Sun / Spending Season
Night = Deflation / Rest / Moon / Saving Season
Except you are forgetting recession. Recession = a decrease in the rate of increase/growth.

Further, the explanation above proves you are A). nutty B). know almost nothing about economics.

Hint: general price deflation does not cause some sort of magic price reset vis a vis incomes such that workers are not hurt somehow while prices reset.

During deflation exports implode, employment implodes, investment implodes, short term prices are unstable - the later making the former worse.

To wit the little guy lucky enough to have a job during deflation and the rich guy with bales of free cash (assuming buyers will accept the newer treading towards worthless cash) do well. Everyone else starves. Not to menton U3 unemployment rockets to 20-35%. Good luck with that.
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Old 10-08-2018, 04:12 PM
 
64,605 posts, read 66,129,695 times
Reputation: 43026
you are wasting your time .
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