Deflation is winning

[kewp]

[quote=sdduuuude]Read somewhere that Japan entered their period of deflation with net savings. We enter ours in debt.[/quote]

Savings is deflationary!

Japan got hit with a double-edged katana during their deflationary period. A nation of savers that honor their debts.

We have neither of those problems here in America!

[Omega Point]

[quote]a global run on the dollar that causes people holding our hard currency to exchange it for something else[/quote]

I don’t know how likely this is to happen but it does concern me. Here’s how I see it may play out.

First, we have deflation and deflation makes it more difficult for debtors to pay their debts. We all know that many Americans and companines are having trouble paying their debts. This eventually spirals to the point where gov’ts at all levels are not collecting enough tax revenues to cover their spending and debt.

Next, Democrats control Congress and the Presidency and thereby control spending. New programs (Obama has proposed at least $1 trillion of new spending) are added that increase the debt and deficit while tax revenue continues to decline even as taxes are increased (increased taxes causing economic activity to sink further).

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments. Gov’t begins to rapidly print money to not only fund its operations but also to pay for the increased size of the interest payments. There is a massive run to exit the dollar and this fuels hyper-inflation.

[Omega Point]

[quote]a global run on the dollar that causes people holding our hard currency to exchange it for something else[/quote]

I don’t know how likely this is to happen but it does concern me. Here’s how I see it may play out.

First, we have deflation and deflation makes it more difficult for debtors to pay their debts. We all know that many Americans and companines are having trouble paying their debts. This eventually spirals to the point where gov’ts at all levels are not collecting enough tax revenues to cover their spending and debt.

Next, Democrats control Congress and the Presidency and thereby control spending. New programs (Obama has proposed at least $1 trillion of new spending) are added that increase the debt and deficit while tax revenue continues to decline even as taxes are increased (increased taxes causing economic activity to sink further).

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments. Gov’t begins to rapidly print money to not only fund its operations but also to pay for the increased size of the interest payments. There is a massive run to exit the dollar and this fuels hyper-inflation.

[Omega Point]

[quote]a global run on the dollar that causes people holding our hard currency to exchange it for something else[/quote]

I don’t know how likely this is to happen but it does concern me. Here’s how I see it may play out.

First, we have deflation and deflation makes it more difficult for debtors to pay their debts. We all know that many Americans and companines are having trouble paying their debts. This eventually spirals to the point where gov’ts at all levels are not collecting enough tax revenues to cover their spending and debt.

Next, Democrats control Congress and the Presidency and thereby control spending. New programs (Obama has proposed at least $1 trillion of new spending) are added that increase the debt and deficit while tax revenue continues to decline even as taxes are increased (increased taxes causing economic activity to sink further).

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments. Gov’t begins to rapidly print money to not only fund its operations but also to pay for the increased size of the interest payments. There is a massive run to exit the dollar and this fuels hyper-inflation.

[Omega Point]

[quote]a global run on the dollar that causes people holding our hard currency to exchange it for something else[/quote]

I don’t know how likely this is to happen but it does concern me. Here’s how I see it may play out.

First, we have deflation and deflation makes it more difficult for debtors to pay their debts. We all know that many Americans and companines are having trouble paying their debts. This eventually spirals to the point where gov’ts at all levels are not collecting enough tax revenues to cover their spending and debt.

Next, Democrats control Congress and the Presidency and thereby control spending. New programs (Obama has proposed at least $1 trillion of new spending) are added that increase the debt and deficit while tax revenue continues to decline even as taxes are increased (increased taxes causing economic activity to sink further).

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments. Gov’t begins to rapidly print money to not only fund its operations but also to pay for the increased size of the interest payments. There is a massive run to exit the dollar and this fuels hyper-inflation.

[Omega Point]

[quote]a global run on the dollar that causes people holding our hard currency to exchange it for something else[/quote]

I don’t know how likely this is to happen but it does concern me. Here’s how I see it may play out.

First, we have deflation and deflation makes it more difficult for debtors to pay their debts. We all know that many Americans and companines are having trouble paying their debts. This eventually spirals to the point where gov’ts at all levels are not collecting enough tax revenues to cover their spending and debt.

Next, Democrats control Congress and the Presidency and thereby control spending. New programs (Obama has proposed at least $1 trillion of new spending) are added that increase the debt and deficit while tax revenue continues to decline even as taxes are increased (increased taxes causing economic activity to sink further).

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments. Gov’t begins to rapidly print money to not only fund its operations but also to pay for the increased size of the interest payments. There is a massive run to exit the dollar and this fuels hyper-inflation.

[peterb]

Threadkiller makes a very good point that most people on here should listen to. Unemployment! All this talk of ratios of income/prices and rents being less than buying, etc….wont mean a hoot-in-hell if we’re at 10% unemployment.

Try not having a job against those ratio’s and justifications!!! I assure you, they lose every time.

It gets bad enough and we’ll see lots of places that will have a higher rent cost than a mortgage. People are becoming VERY risk averse and this sentiment will grow. That’s when I’ll get interested.

[peterb]

Threadkiller makes a very good point that most people on here should listen to. Unemployment! All this talk of ratios of income/prices and rents being less than buying, etc….wont mean a hoot-in-hell if we’re at 10% unemployment.

Try not having a job against those ratio’s and justifications!!! I assure you, they lose every time.

It gets bad enough and we’ll see lots of places that will have a higher rent cost than a mortgage. People are becoming VERY risk averse and this sentiment will grow. That’s when I’ll get interested.

[peterb]

Threadkiller makes a very good point that most people on here should listen to. Unemployment! All this talk of ratios of income/prices and rents being less than buying, etc….wont mean a hoot-in-hell if we’re at 10% unemployment.

Try not having a job against those ratio’s and justifications!!! I assure you, they lose every time.

It gets bad enough and we’ll see lots of places that will have a higher rent cost than a mortgage. People are becoming VERY risk averse and this sentiment will grow. That’s when I’ll get interested.

[peterb]

Threadkiller makes a very good point that most people on here should listen to. Unemployment! All this talk of ratios of income/prices and rents being less than buying, etc….wont mean a hoot-in-hell if we’re at 10% unemployment.

Try not having a job against those ratio’s and justifications!!! I assure you, they lose every time.

It gets bad enough and we’ll see lots of places that will have a higher rent cost than a mortgage. People are becoming VERY risk averse and this sentiment will grow. That’s when I’ll get interested.

[peterb]

Threadkiller makes a very good point that most people on here should listen to. Unemployment! All this talk of ratios of income/prices and rents being less than buying, etc….wont mean a hoot-in-hell if we’re at 10% unemployment.

Try not having a job against those ratio’s and justifications!!! I assure you, they lose every time.

It gets bad enough and we’ll see lots of places that will have a higher rent cost than a mortgage. People are becoming VERY risk averse and this sentiment will grow. That’s when I’ll get interested.

[Arraya]

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments.

O’Neill, fired in a shakeup of Bush’s economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from “the corporate crowd,” a key constituency.
O’Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. “You know, Paul, Reagan proved deficits don’t matter,” he said, according to excerpts. Cheney continued: “We won the midterms (congressional elections). This is our due.” A month later, Cheney told the Treasury secretary he was fired.

[Arraya]

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments.

O’Neill, fired in a shakeup of Bush’s economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from “the corporate crowd,” a key constituency.
O’Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. “You know, Paul, Reagan proved deficits don’t matter,” he said, according to excerpts. Cheney continued: “We won the midterms (congressional elections). This is our due.” A month later, Cheney told the Treasury secretary he was fired.

[Arraya]

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments.

O’Neill, fired in a shakeup of Bush’s economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from “the corporate crowd,” a key constituency.
O’Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. “You know, Paul, Reagan proved deficits don’t matter,” he said, according to excerpts. Cheney continued: “We won the midterms (congressional elections). This is our due.” A month later, Cheney told the Treasury secretary he was fired.

[Arraya]

Finally, the debt and deficit swell to the point where foreigners are no longer sure they will get paid back in full because there is no sign the U.S economy will grow fast enough to make up for the increased spending and interest payments.

O’Neill, fired in a shakeup of Bush’s economic team in December 2002, raised objections to a new round of tax cuts and said the president balked at his more aggressive plan to combat corporate crime after a string of accounting scandals because of opposition from “the corporate crowd,” a key constituency.
O’Neill said he tried to warn Vice President Dick Cheney that growing budget deficits-expected to top $500 billion this fiscal year alone-posed a threat to the economy. Cheney cut him off. “You know, Paul, Reagan proved deficits don’t matter,” he said, according to excerpts. Cheney continued: “We won the midterms (congressional elections). This is our due.” A month later, Cheney told the Treasury secretary he was fired.

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