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Old Today, 12:42 PM
 
2,781 posts, read 752,813 times
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Quote:
Originally Posted by NJBoy3 View Post
Will smarter minds please explain the inflation / deflation cycle.
No such cycle exists.

There are swings between economic expansion and economic contraction, but they are not cyclical (they cannot be forecast with any precision and is not well described by any system of mathematical equations.)

There are such swings between inflation & deflation.
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Old Today, 01:42 PM
 
2,781 posts, read 752,813 times
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Quote:
Originally Posted by NJBoy3 View Post
So inflation is too few items.
Incorrect.

Inflation is an increase in the general price level of goods and services. For example, imagine a make-believe world where the price of everything doubled instantaneously, and the value of all your assets doubled instantaneously, and all compensation doubled instantaneously, etc. In this make-believe world, the price levels have doubled, but standards of living are the same.

What typically happens during inflationary times is that the general price level increases, but individual goods and services may increase more or less than the mean or median. Thus, the price of salt may go up more relative to the price of sugar than the price of sneakers goes up relative to the price of dress shoes.


Quote:
Originally Posted by NJBoy3 View Post
Deflation is too many items.
Incorrect.

Deflation is a decrease in the general price level - the inverse of inflation. Imagine that make-believe world once again, and magically the price of everything -- including labor and assets -- is cut in half. Once again, standards of living are the same in this make-believe world.

There is no predictable cycle of inflation followed by deflation followed by inflation followed by deflation, etc.

Quote:
Originally Posted by NJBoy3 View Post
So if there are not enough good paying jobs people have too little money. Deflation.
Incorrect. For example, right now we have full employment by every measure - and employees can literally drive into the wrong workplace, enter through the door, and be hired on the spot. Yet we have little evidence of inflation.

Quote:
Originally Posted by NJBoy3 View Post
So how do we get out of this.
What, precisely, is the "this" to which you wish to escape? A record number of people working? Record low unemployment? Something else?
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