Deflation is good for the poor folk. Bad for those rich ppl. I say bring on the deflation..........

Nonsense.

Do you think your wages/benefits will stay the same if their is widespread deflation?

The US economy would sink into an extended depression if we sank into a deflationary spiral.

Look at the only time in the past hundred years that we had significant deflation. The Great Depression. How did poor people fare then?

It has been almost universally accepted that low and stable price inflation is the best recipe for economic success.

Deflation spirals out of control and, especially in a debtor nation, leads to widespread poverty and suffering.

My sentiments exactly.... not to mention the fact that the government will be unable to service its debt obligations in a deflationary environment.

No, this deflationary period will be brief. Very brief.

That's why they CAUSED THIS TO HAPPEN. Just like I predicted on this website over 2 years ago.

Stop being suckers.

Tyler, for you and other members trying to keep scores straight at home, Vision is a proud 55-year old former servant of the Great State of Minnesota, who in numerous occasions has said he's on a state pension guaranteed by law, and actually said pension is going up. Vision doesn't care about our wages/benefits; he's got his and that's all he cares.

You will either face collective bankruptcy in deflationary environment or destruction of currency and American purchasing power in hyperinflationary one.
Choice is your.

IMO on the race to bottom you will get periods of deflation mixed with periods of hyperinflation.

And you are running out of ammo to prevent deflation happen in any case.

You can print as much money as you wish and set interest rate at zero %, but what if consumers simply refuse to borrow it and anything what fallen into their hands is simply hoarded or used to repay existing debt?
You cannot force peoples to spend.
And if they are frightened of bankruptcy and house repossession, they will hoard to pay their debt.
That is beyond control of monetary authorities.

Then what? Helicopter solution?
Only think what will follow deflationary period, once this excess of money created in panic started moving at some point...
Think Wiemar here...

+1
Bring it on baby.........

And if Minnesota has less and less tax revenue every year thanks to falling incomes, falling property values, falling sales taxes, etc..

Does he really think the state will be able to meet its obligations in that scenario?

Regardless, it's not going to happen.

Deflation, fiat currency, and a heavily indebted federal government do not mix.

Which scenario seems more likely to you?

1. Deflationary depression in which VM still gets his yearly COLA.

2. The Federal Reserve buys lots and lots of Treasurys (aka, prints money) and the Federal Government throws the money into the economy in accordance with basic Keynesian principles. You know, the same theory that has guided global economic policy since the 1930s.

I think, we are running out of resources required to run economy as per Keynesian principles.
Current levels of debt are also IMO too high to allow that.

However we are likely to attempt Robert's Mugabe principles.

Central bankers wary of deflation

anyone with fixed debts has more to pay with deflation. Say interest rate is 5% on the house loan of $200,000 and deflation is minus 5% and the real house price keeps falling to say $100,000 then he's paying for double what he has at double the interest rate. Earning money is almost impossible and if you had cash it would earn nothing with ZIRP in the bank although it is now as good as govt. bonds. If interest rates are 5% and inflation is 5% then real interest rate is 0%. So yeah anyone with debt is in a crap load of trouble in a deflationary environment even with ZIRP as that does not help much.

And when populism kicks in good and proper he will discover that what the law giveth with a stroke of the pen the law taketh away with the stroke of a pen.

The same goes with all of those with a fixed benefit pension negotiated by the union... what was given in negotiation can be taken with negotiation (or chapter 11).

Those whom the gods would destroy, they first make proud.



Famous last words.

And the biggest debtor is currently the gov- who is also in the position to alter deflation for inflation.... Wonder what they'll do?

-G

Ain't gonna happen. The Governor would have to sign off on it. But, non-retiree's WILL see changes.......

I take it you don't have kids or grandkids? Or you just don't give a crap about them?

Your attitude represents the worst of the boomer/retiree crowd. selfish and pathetic.

-G

When the time comes he will sign off on it for the "good of the state" and out of "economic necessity."

But keep on telling yourself you are untouchable if that makes you feel better. In reality, you are even more expendable because you are retired and not currently producing; you cannot go on strike, you cannot steal the stapler, you cannot be passive aggressive to the boss on boss' day.

You are exposed. The sooner you accept and embrace the reality the sooner you can start to do something about it... maybe if you start showing up at the Hard Times Cafe now you will be able to get a good corner when the place starts to get crowded?

----
edit: and when it does and you complain; don't be surprised if you are greeted with a boat load of

Just a little old fashioned karma sorry can't find a video... a great tune if you decide to buy it.


Last edited by wisconsin_cur on Fri Nov 21, 2008 6:05 pm; edited 1 time in total

What I am worried about right now is not the welfare of the big guys. They need restructuring as per the article. Nor am I so worried about all of the positions that the little guys have held historically, bought under the old way of doing things. What worries me is what people may do now, with the little discretionary money they have to spend. Loads of people here are stocking up on gold. I am not sure they understand that deflation could eventually whack at the gold price as well.

Consider this scenario, gold in the short term may be a good investment, but as soon as the institutional holders of money go for the sucker rally that is coming they will abandon gold and the price will drop. So, you are saying, if it is a sucker rally then they will go back into gold and the price will recover, right? Yes, and no. It will probably recover, but it could recover to a deflationarily adjusted new level that would be in dollars lower than the current level.

I am looking to position what little I have to take advantage of the sucker rally and then, I don't know - probably stay in cash, or wait to see what liquid or semi-liquid investments stabilize and park my money there. I am definitely looking long term at what peak oil means for investments. I think that a lot of the oil related companies might be good investments, especially as they fall in price, given what we know the future holds.

I don't have a lot of money, though, so my strategy reflects where I am at. Those of you with more to invest probably have more discretionary money with which to diversify. Gold could be good for you balanced against other positions that have potential as well. What I am saying is not so much, I hate gold, as much as, I can't think about gold because I see too much risk in it presently. After things grind on a while the situation may change. Let's hope that change hasn't buried the gold bugs on this site.

Lay off the crack pipe.

Hubris.

The deflation will be some relief for a while, but won't last. The dollar is in a bubble, and will crash hard I think.

Remember, if the dollar loses 50% of it's value, that doubles cost of goods.

Pray the hyperinflation is short. The US will be a smidgen compared to it's former self, but if we don't let them ship the food out under arms to foreign nations, we should be ok.
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