Depression in the USA - Deflation verus Inflation

[JBmurc]

Just as well Obama seems to have found his mojo again. Surely the American public won't vote a Bush-style administration into office.

Many of the Bush administration moved into the Obama camp once in office ---just checkout the facts from the link below

http://stpeteforpeace.org/obama.html

If Romney gets in nothing will change just like it didn't under Obama more of the same(anyone remember Obama's speeches of CHANGE ... ...who gets a chance at office is decided by the investors of the administrations to get into office (same people that have control of Goldmans/JP morgan/HSBC/FED/ECB/Exxon/BP /Blackrock/boeing/Defense contractors etc ......)

the people with the no control is the Voters...

[tricha]

tricha,

Re. cash is trash. Let's see if cash is trash over the next few weeks.

And why would that be Skol?

[skid]

JB its the lesser of 2 evils thats for sure-but read the Truthdig article
a few posts back and see if you still agree -they both represent corporate interests but a Romney win would be far worse

[skid]

And why would that be Skol?

I think hes concerned over fridays sell off in the US

[tricha]

I think hes concerned over fridays sell off in the US

Great sell off, ASX hardly affected, to much cash rotting in the banks, wanting a better home.
What is the interest rate at the banks, a p\e of 50 or so.
f you compare it to the stock market, the stock market has a far better return.

Expect the yanks to wake up tomorrow and think the same.

[Skol]

I expect the US stock market to drop 20% from here, if the same applied to gold that would make it $1360.

Sounds about right.

[JBmurc]

I expect the US stock market to drop 20% from here, if the same applied to gold that would make it $1360.

Sounds about right.

right is that 2013 bet is it skol Gold to fall to 1360 ?

[Aaron]

Although predicting the future seems a little pointless I read in the herald this morning some European countries are flirting with deflation. Time to pay off all debts and wait for asset prices to come down before reinvesting? Cash would be a good investment instead of purchasing power being eroded by inflation and low interest rates. Although with deflation economists might start talking about negative interest rates that will make cash bad and I will need to own real assets.

I still don't see that deflation is all that bad unless you are heavily indebted(as most governments are). People won't stop buying food and other essentials just because prices are going down. It is unlikely that shopkeepers, employees, manufacturers etc will be in a big rush to lower prices.

If energy consumption and global warming etc is related to how we live our lives maybe something needs to change. I don't buy into this constant need for growth in population and consumption and GDP activity(especially in NZ) but I am up against the world central banks with their need to create inflation. Is inflation inevitable or will the humans take a breather and live a simpler life without the constant need for new phones, tvs, cars etc.?

[skid]

I dont believe in the continuous growth scenario either -but deflation is far worse for the economy in general than inflation--There will be severe pain if it really gets going

[Aaron]

Lower prices cause severe pain? Increased purchasing power decreases spending? Inflation hits people on fixed incomes hardest. Retired people, wage earners without bargaining power or a good union.

In some countries the population is declining shouldn't they therefore deflate or at least not inflate their money supply as they don't have the constant need for growth.

I think any economist who says deflation is bad, probably has a big mortgage or a margin loan or both and his/her investment strategy is relying on the traditional debt and inflation way to wealth that I am currently resisting as I have grown up being taught to be wary of debt. Sadly when I was young I should have mortgaged and borrowed up to my eyeballs for any real estate.

I think deflation has less chance of spiralling out of control than inflation because there is more resistance from businesses to lower prices (in my case anyway) than increase them (I would much rather increase prices) and employees will be resistant to lower wages.

That said I know nothing so I guess we will just have to continue to go along with what the economists say is the best way to live our lives.