rbohm said:
<<if we get into deflation, then wages will stagnate, prices will stagnate, and production will suffer as a result. that means fewer jobs. why would someone go out and buy a new car at say $25k when all they have to do is wait for a few months, and the same car will be $20k?>>
First of all, when can you recall a time when there was ever a problem of deflation anywhere that was so devastating it crippled an economy? Secondly, there has been more inflation than deflation, since inflation is good for governments. When a currency fails and prices fall it is just a return to normal prices not deflation.
What is so terrible about lower prices if it means more sales generating more revenue anyway? Inflation is far worse when prices are so high no one can afford to buy the product to begin with. IT IS JUST COMMON SENSE for Pete's Sake!
You said:
<<manufacturing in not dead in this country. take ford products assembled in mexico for instance, the parts are made here, and sent to assembly plants in mexico, then the finished product is sent back here for sale. why? because it is cheaper to do it that way.>>
It would be more profitable AND cheaper if it was done the way it USED to be done in this country before the government stuck its nose in everything and before the unions took so much control. Sorry but your argument is weak. Do you see the Germans or the Japanese doing what we do?
You said:
<<we grow plenty of food in this country, the problem is that we dont grow enough.>>
Why do you think that is???? I'll tell you why. It is like you said with building cars... it is cheaper to import because there is less US Govt involvement which costs money. But it doesn't help production in this country when it is MORE expensive to grow our own food than it is to import it. Don't you think there is something WRONG with that picture????
Perhaps, the reason, as I've said before over and over and over is that government has gotten too da%&n big and obtrusive????
All we need to do is look back and see what we were doing right when we were the largest creditor nation not the largest debtor nation as we are now...and stop doing what we are doing now and GO BACK to doing what we did then.
You said:
<<you have one problem here with this example. it is NOT one of deflation, but rather cost cutting in the extreme. the cost of building computer components has fallen substantially each year until the biggest cost is the labor for putting the components together, and installing the operating systems and other programs.>>
That was just used to illustrate that the lowering of costs in deflationary times is NOT the end of the world and can be good for both businesses and consumers. I never said that computer costs were lowed due to inflation nor did I say that they were cutting costs. I just tried to point out that businesses that lower costs and improve their products at the same time are not hurt by it... like for some reason some posters are wrongly convinced is the case.
Deflation brings INCREASED purchasing power for us which is who we need to be first and foremost concerned about.
You said:
<<again the issue isnt deflation, but rather cutting costs, a big difference. inflation is not a job killer, but excessive inflation is>>
Lowering prices was the issue so many seemed to be concerned about in deflation not "cutting costs" and it really isn't as bad a problem as everything that comes with inflation, namely that food and utilities are more expensive. It costs a lot more just to get by. That effects everyone! It certainly doesn't make jobs more plentiful either.
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