Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
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.
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.
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...
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.
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.
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.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
