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If your speculating that home or car prices are going to drop its because they're overpriced for the market.
And people already do that with smaller purchases. They wait for specific seasons, deals, etc.
If deflation hits certain areas like housing, it will increase the number of houses bought (they're cheaper, hello!) and people will have more disposable income. Rent becomes cheaper and people instantly have an extra $100 to $200 to spend on other businesses.
So what's the issue?
You are posting in support of adopting policies that spur deflation. All of these things are a result of spurred deflation. The mere fear of deflation can cause these problems.
If your speculating that home or car prices are going to drop its because they're overpriced for the market.
And people already do that with smaller purchases. They wait for specific seasons, deals, etc.
If deflation hits certain areas like housing, it will increase the number of houses bought (they're cheaper, hello!) and people will have more disposable income. Rent becomes cheaper and people instantly have an extra $100 to $200 to spend on other businesses.
So what's the issue?
It's not speculation, deflation is a general decline in prices and wages don't stay fixed during deflationary periods they too will fall.
As production slows down to accommodate the lower demand, companies reduce their workforce resulting in an increase in unemployment. These unemployed individuals may have a hard time finding new work during a recession and will eventually deplete their savings in order to make ends meet, eventually defaulting on various debt obligations such as mortgages, car loans, student loans and credit cards.
The accumulating bad debts ripple through the economy up to the financial sector that must write them off as losses. As banks' balance sheets become shakier, depositors seek to withdraw their funds as cash in case the bank fails. A bank run may ensue, whereby too many deposits are redeemed and the bank can no longer meet its own obligations. Financial institutions begin to collapse, removing much needed liquidity from the system and also reducing the supply of credit to those seeking new loans. Central banks often react by enacting a loose, or expansionary monetary policy. This includes lowering the interest rate target and pumping money into the economy through open market operations – buying treasury securities in the open market in return for newly created money. If these measures fail to stimulate demand and spur economic growth, central banks may undertake quantitative easing by purchasing more risky private assets in the open market. The central bank can also step in as lender of last resort if the financial sector is severely hindered by such events. (For more, see: How Unconventional Monetary Policy Works.)
Governments will also employ an expansionary fiscal policy by lowering taxes and increasing government spending. The problem with lowering taxes in a period of low prices and high unemployment, however, is that overall tax revenues will decrease, limiting the ability of government to operate at full capacity.
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Explain to me how inflation would help our Economy right now.
simplified/quick explanation is that if you know it will cost 5% more later to buy something due to inflation... you just buy today and use tomorrow
Companies invest in themselves/expand today while it is "cheaper" than tomorrow's after inflation. This drives the economy...
when it is deflation, and you keep thinking tomorrow will be cheaper, and you never spend "today", eventually you just never spend except for bare minimums, which isn't good for economy.
Wasn't 2008 pretty much what OP wanted as a deflation? That wasn't so good for the economy was it? If I had to guess, I'd say the OP just wants cheaper investments because he thinks it is too high right now. Nothing to do with helping economy
simplified/quick explanation is that if you know it will cost 5% more later to buy something due to inflation... you just buy today and use tomorrow
Companies invest in themselves/expand today while it is "cheaper" than tomorrow's after inflation. This drives the economy...
when it is deflation, and you keep thinking tomorrow will be cheaper, and you never spend "today", eventually you just never spend except for bare minimums, which isn't good for economy.
Wasn't 2008 pretty much what OP wanted as a deflation? That wasn't so good for the economy was it? If I had to guess, I'd say the OP just wants cheaper investments because he thinks it is too high right now. Nothing to do with helping economy
That makes no sense on the majority of every day purchases.
The majors, housing/transportation, would see an increase in sales if prices were to drop. Not a decrease.
How can homes be priced accurately if Americans can't afford them?
The reason there was no statistical inflationary pressure in America in the better part of the decade is because .....
You can explain it away however you like. The "why" doesn't matter. The "is" is what matters. And we have deflation. And it is about to get a whole lot worse. You hit the nail on the head...there is no one to buy all this crap which we can "cheaply" produce...at any price. Deflation, leading to Depression. Just look at the Retail Sales figures for the past year or so. NO Interest...even at Wal-Mart! And that is with the Dollar screaming. What happens when people realize that there will be NO interest rate increase? Suddenly those goods, if they could sell them, are not so profitable.
Why would people buy more when their wages aren't increasing??
Are you going to magically raise everyone's wages? I can't raise my wages. If I could I'd pay myself, or those who help me more.
You can't have it both ways, you've already questioned why deflation would slow buying after all people have needs and wants and now you are asking the same question on the flip side. Do you understand inflation and deflation?
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