Who here is worried about deflation?

Discussion in 'Miscellaneous' started by propita, Nov 20, 2008.

  1. propita

    propita Rear Admiral Rear Admiral

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    I remember when I was a kid, seeing pictures of the Depression (apples for a nickel, etc) and asking my Dad why didn't people just buy the food. He said they literally didn't have any money. That that was called "deflation," where the prices keep dropping but no one's buying anything.

    So does that mean that people who DO have continuing jobs, paying the same wages as this year, would come out of this fairly well?

    Any economists out there who're willing to explain?
     
  2. Gagh

    Gagh Commodore Commodore

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    Sultry Susan sprung a leak last week, but luckily I'd got a puncture repair kit the week before. Thanks for asking, my friend.
     
  3. propita

    propita Rear Admiral Rear Admiral

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    That took me a second, then :lol::lol::lol:.
     
  4. John Picard

    John Picard Vice Admiral Admiral

    If I were you, I'd worry more about Stagflation.
     
  5. Mr Awe

    Mr Awe Vice Admiral Admiral

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    It all comes down to supply and demand. If demand drops, the prices drop. Demand can drop for a variety of things from an item being last year's fashion to fewer people having spending money. No, I don't think deflation will be a big problem. But, yes, for those who have money, if the prices drop they can buy more.

    Mr Awe
     
  6. Mallory

    Mallory Moderator In Memoriam

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    I'm not worried about deflation. I'm more worried about the combination of inflation, high unemployment and soaring interest rates and/or tight credit.
     
  7. Meredith

    Meredith Vice Admiral Admiral

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    No worries about deflation as long as my salary doesn't deflate too much.
     
  8. Captain Intrepid

    Captain Intrepid Vice Admiral Admiral

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    A lot of people did very very well for themselves during the Great Depression. Of course, a lot of people starved or froze to death or were shot by corporate agitators too.
     
  9. John Picard

    John Picard Vice Admiral Admiral

    Stagflation.
     
  10. Elmo Dukat

    Elmo Dukat Guest

    Me too. In fact, that's how policy has been trending lately, even though easy money and high taxes is a historically losing combination. But what do you do when you don't like the lessons of history? Well, write your own version of history, of course! :rommie: :vulcan: :p
     
  11. Mallory

    Mallory Moderator In Memoriam

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    Sometimes a more simple explanation works best JP.
     
  12. John Picard

    John Picard Vice Admiral Admiral

    :techman::shifty:
     
  13. Mr. Laser Beam

    Mr. Laser Beam Fleet Admiral Admiral

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    I'm not worried about deflation or even stagflation. I just prefer flation.
     
  14. Holdfast

    Holdfast Fleet Admiral Admiral

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    No. Because they wouldn't have their job for long.

    Deflation occurs because people are scared to spend money.

    No spending = price cuts = job cuts = wage suppression = deflation = your money buys more tomorrow than today.

    Follow the cycle through to the logical conclusion. No-one dares spend anything because a) you can buy more tomorrow with the same money and b) they think they're going to lose their job tomorrow.

    Your economy hits the wall. Dies. Is buried six feet under. And then starts digging.

    Inflation is scary too of course, but deflation is sheer terror.

    As JP and others point out though, stagflation is extreme bowel-loosening trauma... :D

    The real problem that central banks are going to face is that they're running out of room to maneouvre on monetary policy. Close to zero interest rates beckon, which DOES create a risk of deflation... and just ask Japan how THAT works out.... :D
     
  15. propita

    propita Rear Admiral Rear Admiral

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    Well, I figure there are some jobs that remain okay. Hubby's a pharmacist. One way or another, people need their meds--or they get sick and/or die. Pharmacists are in short supply (I've read there are more attorneys in CA than there are pharmacists in the entire US).

    So I was hoping that if things do head to 1930s Depression deflation, that Hubby and I will still be...well, not great, but okay.
     
  16. Captain Intrepid

    Captain Intrepid Vice Admiral Admiral

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    Though even in the Great Depression, that didn't happen. Unemployment was huge, but those with decent jobs they could keep did fantastically well for themselves.
     
  17. Mallory

    Mallory Moderator In Memoriam

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    When people can't afford to buy medications (i.e. unemployment soars) that's exactly what happens. People get sick AND die. No one way or another, they just stop taking their drugs. Most people will pay the rent and utilities before they pay for drugs.

    How many fewer customers would it take before your hubby was looking for a job somewhere else?
     
  18. John Picard

    John Picard Vice Admiral Admiral

    Anyone who thinks his job is safe is a fool.
     
  19. Ben Sisko3

    Ben Sisko3 Commodore Commodore

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    Elsa, you have to listen to me! That man is not an economist!
     
  20. JonathonWally

    JonathonWally Admiral Admiral

    People will always call 911