Inflation, Deflation & Capacity Utilization 2

More on inflation and capacity utilization

Category:

Education

Tags:

• inflation
• money
• supply
• deflation

[TallFastLoud]

@yahodeva credit. There are three options: we can have your plan of 'no debt and no wage increases' and have torpid growth; we can increase purchasing power (but not wages) via unsustainable debt; or we can increase real wages to match productivity growth. The idea that it's a 'lesser of two evils' choice between the first two options is a sign of how far right the economic consensus has moved in this country.

[TallFastLoud]

@yahodeva well, debt is necessary to a certain degree, whether you like it or not. I do totally agree about the demerits of excessive debt. however, real wages have been stagnating for a while now in the US, meaning that aggregate demand could no longer drive growth. as Ford would've said 'you have to sell the shit to someone.' since income inequality soared and wages stagnated or fell, we had to give the lower/middle classes some purchasing power to maintain growth and that came via cheap

[yahodeva]

@TallFastLoud Appreciate your views, however i believe current sacrifice in consumption and saving is what builds your future. You cannot always keep on borrowing all the time. You save today, sacrifice today and that allows to set up your future comfortably. same goes for buying a house, building a business. You save today, sacrifice today and build tomorrow. Borrowing again and again to pay back earlier debt is nothing but a ponzi scheme and that cannot be sustained forever.

[TallFastLoud]

@flyingparadise small businesses [which rely more on borrowing than issuing stocks/bonds.]) Your comment is nearly exactly the opposite of the consensus on these things.

[TallFastLoud]

@flyingparadise a) inflation is bad for the rich -- who generally have the highest savings rate -- and not bad at all for people with lower rates of savings, especially those who are able to obtain wage increase that correspond with inflation. we actually can live with persistent inflation (we always have SOME degree of inflation), which isn't bad provided it doesn't get out of control. falling prices are actually bad for people who need to borrow frequently (i.e. the worse off sectors and

[mrhnm]

@TheCIAsucks Look into Austrian Economics.

[mrhnm]

@frother What I care about is getting money out of my savings account and into something like silver.

Why?

Because inflation devalues your money faster than the interest the bank gives you compenstates. Id est your money loses value every time the FED prints money. They are stealing from you.

[frother]

@flyingparadise

There's no inherently true price for a good. As inflation goes up, that just means that the dollar is worth less, not that the good costs more.

What you really care about is the rate of price increase of the good compared to the rate of price increase of other goods and the rate of wages increase.

[TheCIAsucks]

I really like this guy and his explanations, but there is something very unconvincing about this one. I don't think his conclusions are justified.

[pdeg001]

@Korianne75 It all depends on what action the Federal Reserve takes. If the Fed keeps bailing out corporations and banks, monetizes the government debt, and monetizes loans that are in danger of defaulting, there will be massive inflation - possibly hyperinflation. If the Fed lets everything default, there will be massive deflation - worse than the 1930s. Unfortunaetly, deflation is the better action to take so markets can restructure.