On 5/17/10 4:13 PM, Joshua Zeidner wrote:
you might see some kind of short term deflation, but any substantial
deflation would break us. Any time you have debt, then deflation
makes that debt harder to pay. Not only would it be tragic for
Americans on a personal level, but on a state and federal level it
would be equally disastrous. eg. What would happen if everyone's
salary were halved next week? Massive default on mortgages, housing
inventory increases, values go down, etc. I would think that
deflation might be beneficial, I just don't think its an option
(either financially or politically). Most likely they will just print
their way out of this, and destroy the dollar in the process.
-jmz
I have been reading through this and as someone who has an accounting
background (thank you GCC),
you all have not mentioned one important fact: the rate at which
deflation could (or would) occur.
A low rate (say under 2% would have minimal effects on the economy in
the very short term, it would
start making life a litte more difficult with time, but not
substantially so. IF, however, the rate if deflation went up
or varied wildly over the long term, yeah,, I could see the above
scenarios coming to pass.
The biggest problem with have in this country is a lack of personal
responsibility for ones own actions
(including incurring debt). we need to be a lot more responsible and we
need to force the states into
doing so at their level. 5 years ago, Arizona had 2 billion in excess
cash set aside (call it a rainy day fund).
the politicians couldn't leave well enough alone and now here we are,
suffering a 2.1 billion dollar shortfall
for this year alone. California was living on borrowed time ever since
gray davis started as governor.
Personally, I have gotten rid of all my credit cards (can't have them
anyone living on a disability income),
I am paying down any debts I have left (just over $3,000 at this point)
and will be debt free in 3 years.
I view credit as nothing more than a company selling you the money you
borrow (debt) and then charging you
monthly to be able to use that money. it isn't yours. its a legal scam IMHO
anyway, my point is this: deflation might actually be a good thing for
this country, if and only if, it can
be held to a minimum level for as long as possible.
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