Deflation is generally not a bad thing for people who save or people who lend (unless the deflation forces a default). It's a bad thing for people who borrow.
-jmz On Tue, May 18, 2010 at 3:23 PM, Eric Cope <eric.c...@gmail.com> wrote: > As the Austrians point out, deflation in real terms (not inflicted by the > Federal Reserve) is actually a result of the innovation of the free market > and the creation of wealth (as individuals create wealth, things become more > affordable... think of the cost of a brand new technology, like DDR3, as > time progresses, it comes down). > So, you are right, we should experience a general deflation as innovation > creates wealth, making things more affordable for all. (this includes things > like healthcare). > > Eric > > > On Tue, May 18, 2010 at 3:13 PM, Technomage <technomage.ha...@gmail.com>wrote: > >> 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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