inflation or deflation!!?

[Anonymous]

This has been bugging me for a while. I was first a deflationist then turned inflationist. It seems like one problem we have in discussing this is that many deflationists argue about money supply. They treat credit as money and define inflation or deflation as monetary events: expansion or contraction in the money supply.

Inflationists seem to be more fixed on prices. They tend to argue inflation or deflation as a price phenomena. That difference makes meaningful understanding or arguing difficult.

That being said, I tend to agree with pencilneck. We don’t exist in a vacuum. While debt being destroyed causes our money supply to contract, we can still see a drastic increase in prices as the dollar falls and we import goods. Inflation or deflation? Guess it depends on your definition.

My hardest point to swallow about inflation is how does the inflation make it to wages. In the 70s we had unions to push the wages up. We don’t have that now. We have globalization to push them down. For deflation, when I see so many prices rising precipitously, it makes me wonder about that argument.

I tend to agree with the itulip guys that we are headed for inflation. I like their idea that we will try to blow another bubble in alt energy and/or infrastructure. But using methods other than credit.

Just my 2c…

[USMCBunny]

I don’t claim to be very smart on macro econonics, like a lot of lurkers here, I learn from reading this and a couple other blogs.

The best simple definitions of Inflation / Deflation that I have read are simply that Inflation is the creation of wealth, and that deflation is the destruction of wealth. Wealth- obviously can be defined as actual $$$’s (paper or Electronic, “Stuff” (material goods) or even tranferable Debt (The future value of debt anyway … to whomever is getting the monthly payment).

The bursting of the bubble will lead to the destruction of close to a trillion dollars before it is over with. This trillion dollars (A number you could certainly argue up or down) was the notional value of home equity gains and may or may not have been turned into other forms of wealth via HELOC and refinance. Either way – this wealth is rapidly evaporating… it will be gone. This is the destruction of wealth and must be viewed as deflationary.

The inflation / creation of wealth already happened from 2000-2005 via all the paper gains. We are now deflating.

If the US Govt actually buys MBS mortgage debt (which I think would require a change in federal law) – they could potentially create more real debt. (By purchasing them for more then they are actually worth, they would in essence be creating dollars…) this would be inflationary. Until this happens, wealth is still being destroyed (if you owned Bear Stearns Stock… your wealth was destroyed).

I think the price increases we are seeing come not from the creation of dollars, but from the devaluation of the dollars currently in existance. Price increases do not in themselves constitute inflation, and in my thoughts may be more based on deflationary pressure and the consequent reactions to that pressure.

Flywestcoast

[USMCBunny]

I don’t claim to be very smart on macro econonics, like a lot of lurkers here, I learn from reading this and a couple other blogs.

The best simple definitions of Inflation / Deflation that I have read are simply that Inflation is the creation of wealth, and that deflation is the destruction of wealth. Wealth- obviously can be defined as actual $$$’s (paper or Electronic, “Stuff” (material goods) or even tranferable Debt (The future value of debt anyway … to whomever is getting the monthly payment).

The bursting of the bubble will lead to the destruction of close to a trillion dollars before it is over with. This trillion dollars (A number you could certainly argue up or down) was the notional value of home equity gains and may or may not have been turned into other forms of wealth via HELOC and refinance. Either way – this wealth is rapidly evaporating… it will be gone. This is the destruction of wealth and must be viewed as deflationary.

The inflation / creation of wealth already happened from 2000-2005 via all the paper gains. We are now deflating.

If the US Govt actually buys MBS mortgage debt (which I think would require a change in federal law) – they could potentially create more real debt. (By purchasing them for more then they are actually worth, they would in essence be creating dollars…) this would be inflationary. Until this happens, wealth is still being destroyed (if you owned Bear Stearns Stock… your wealth was destroyed).

I think the price increases we are seeing come not from the creation of dollars, but from the devaluation of the dollars currently in existance. Price increases do not in themselves constitute inflation, and in my thoughts may be more based on deflationary pressure and the consequent reactions to that pressure.

Flywestcoast

[USMCBunny]

I don’t claim to be very smart on macro econonics, like a lot of lurkers here, I learn from reading this and a couple other blogs.

The best simple definitions of Inflation / Deflation that I have read are simply that Inflation is the creation of wealth, and that deflation is the destruction of wealth. Wealth- obviously can be defined as actual $$$’s (paper or Electronic, “Stuff” (material goods) or even tranferable Debt (The future value of debt anyway … to whomever is getting the monthly payment).

The bursting of the bubble will lead to the destruction of close to a trillion dollars before it is over with. This trillion dollars (A number you could certainly argue up or down) was the notional value of home equity gains and may or may not have been turned into other forms of wealth via HELOC and refinance. Either way – this wealth is rapidly evaporating… it will be gone. This is the destruction of wealth and must be viewed as deflationary.

The inflation / creation of wealth already happened from 2000-2005 via all the paper gains. We are now deflating.

If the US Govt actually buys MBS mortgage debt (which I think would require a change in federal law) – they could potentially create more real debt. (By purchasing them for more then they are actually worth, they would in essence be creating dollars…) this would be inflationary. Until this happens, wealth is still being destroyed (if you owned Bear Stearns Stock… your wealth was destroyed).

I think the price increases we are seeing come not from the creation of dollars, but from the devaluation of the dollars currently in existance. Price increases do not in themselves constitute inflation, and in my thoughts may be more based on deflationary pressure and the consequent reactions to that pressure.

Flywestcoast

[USMCBunny]

I don’t claim to be very smart on macro econonics, like a lot of lurkers here, I learn from reading this and a couple other blogs.

The best simple definitions of Inflation / Deflation that I have read are simply that Inflation is the creation of wealth, and that deflation is the destruction of wealth. Wealth- obviously can be defined as actual $$$’s (paper or Electronic, “Stuff” (material goods) or even tranferable Debt (The future value of debt anyway … to whomever is getting the monthly payment).

The bursting of the bubble will lead to the destruction of close to a trillion dollars before it is over with. This trillion dollars (A number you could certainly argue up or down) was the notional value of home equity gains and may or may not have been turned into other forms of wealth via HELOC and refinance. Either way – this wealth is rapidly evaporating… it will be gone. This is the destruction of wealth and must be viewed as deflationary.

The inflation / creation of wealth already happened from 2000-2005 via all the paper gains. We are now deflating.

If the US Govt actually buys MBS mortgage debt (which I think would require a change in federal law) – they could potentially create more real debt. (By purchasing them for more then they are actually worth, they would in essence be creating dollars…) this would be inflationary. Until this happens, wealth is still being destroyed (if you owned Bear Stearns Stock… your wealth was destroyed).

I think the price increases we are seeing come not from the creation of dollars, but from the devaluation of the dollars currently in existance. Price increases do not in themselves constitute inflation, and in my thoughts may be more based on deflationary pressure and the consequent reactions to that pressure.

Flywestcoast

[USMCBunny]

I don’t claim to be very smart on macro econonics, like a lot of lurkers here, I learn from reading this and a couple other blogs.

The best simple definitions of Inflation / Deflation that I have read are simply that Inflation is the creation of wealth, and that deflation is the destruction of wealth. Wealth- obviously can be defined as actual $$$’s (paper or Electronic, “Stuff” (material goods) or even tranferable Debt (The future value of debt anyway … to whomever is getting the monthly payment).

The bursting of the bubble will lead to the destruction of close to a trillion dollars before it is over with. This trillion dollars (A number you could certainly argue up or down) was the notional value of home equity gains and may or may not have been turned into other forms of wealth via HELOC and refinance. Either way – this wealth is rapidly evaporating… it will be gone. This is the destruction of wealth and must be viewed as deflationary.

The inflation / creation of wealth already happened from 2000-2005 via all the paper gains. We are now deflating.

If the US Govt actually buys MBS mortgage debt (which I think would require a change in federal law) – they could potentially create more real debt. (By purchasing them for more then they are actually worth, they would in essence be creating dollars…) this would be inflationary. Until this happens, wealth is still being destroyed (if you owned Bear Stearns Stock… your wealth was destroyed).

I think the price increases we are seeing come not from the creation of dollars, but from the devaluation of the dollars currently in existance. Price increases do not in themselves constitute inflation, and in my thoughts may be more based on deflationary pressure and the consequent reactions to that pressure.

Flywestcoast

[DWCAP]

I am feeling you on that one FLU. Great, the computer only costs $500, but it is only gonna last me till 1 day after the 6 month warrenty ends.
Why is it that every company seems to scream from the highest mountain top all about how they source in China. There stuff sucks, even if it is cheap. And Wall street seems to reward them for this. What a load of crap. It is like a buzz word to investors.

Wall Street: “WHat are you doing to keep costs down?”
Company: “China”
Stock price goes up 5%

Wall street: “what are you doing to expand?”
Company: “China”
Stock pice goes up 5%

Wall Street “what is the future of your company?”
Company: “China”
Stock price goes up 5%

Customers: “Why is this new widget such a piece?”
Wall Street: “ask the company”
Company: “tough markets means that nonvital secotors such as Research, Quality control and Customer service have been hurt yada yada yada….”
Real Reason : “China”.
Stock price doesnt move an inch.

All I have to say is that the day the yuan isnt dollar pegged is the day before alot of senior managers are gonna be on the hot seat as the quality went out the window, the customers are pissed, and the shit ante cheap anymore. Notice how the whole currency adjustment thing for China went out the window with the current downturn?

Wall Street to Fed: “What are you doing to control inflation?”
Fed: “China”

[DWCAP]

I am feeling you on that one FLU. Great, the computer only costs $500, but it is only gonna last me till 1 day after the 6 month warrenty ends.
Why is it that every company seems to scream from the highest mountain top all about how they source in China. There stuff sucks, even if it is cheap. And Wall street seems to reward them for this. What a load of crap. It is like a buzz word to investors.

Wall Street: “WHat are you doing to keep costs down?”
Company: “China”
Stock price goes up 5%

Wall street: “what are you doing to expand?”
Company: “China”
Stock pice goes up 5%

Wall Street “what is the future of your company?”
Company: “China”
Stock price goes up 5%

Customers: “Why is this new widget such a piece?”
Wall Street: “ask the company”
Company: “tough markets means that nonvital secotors such as Research, Quality control and Customer service have been hurt yada yada yada….”
Real Reason : “China”.
Stock price doesnt move an inch.

All I have to say is that the day the yuan isnt dollar pegged is the day before alot of senior managers are gonna be on the hot seat as the quality went out the window, the customers are pissed, and the shit ante cheap anymore. Notice how the whole currency adjustment thing for China went out the window with the current downturn?

Wall Street to Fed: “What are you doing to control inflation?”
Fed: “China”

[DWCAP]

I am feeling you on that one FLU. Great, the computer only costs $500, but it is only gonna last me till 1 day after the 6 month warrenty ends.
Why is it that every company seems to scream from the highest mountain top all about how they source in China. There stuff sucks, even if it is cheap. And Wall street seems to reward them for this. What a load of crap. It is like a buzz word to investors.

Wall Street: “WHat are you doing to keep costs down?”
Company: “China”
Stock price goes up 5%

Wall street: “what are you doing to expand?”
Company: “China”
Stock pice goes up 5%

Wall Street “what is the future of your company?”
Company: “China”
Stock price goes up 5%

Customers: “Why is this new widget such a piece?”
Wall Street: “ask the company”
Company: “tough markets means that nonvital secotors such as Research, Quality control and Customer service have been hurt yada yada yada….”
Real Reason : “China”.
Stock price doesnt move an inch.

All I have to say is that the day the yuan isnt dollar pegged is the day before alot of senior managers are gonna be on the hot seat as the quality went out the window, the customers are pissed, and the shit ante cheap anymore. Notice how the whole currency adjustment thing for China went out the window with the current downturn?

Wall Street to Fed: “What are you doing to control inflation?”
Fed: “China”

[DWCAP]

I am feeling you on that one FLU. Great, the computer only costs $500, but it is only gonna last me till 1 day after the 6 month warrenty ends.
Why is it that every company seems to scream from the highest mountain top all about how they source in China. There stuff sucks, even if it is cheap. And Wall street seems to reward them for this. What a load of crap. It is like a buzz word to investors.

Wall Street: “WHat are you doing to keep costs down?”
Company: “China”
Stock price goes up 5%

Wall street: “what are you doing to expand?”
Company: “China”
Stock pice goes up 5%

Wall Street “what is the future of your company?”
Company: “China”
Stock price goes up 5%

Customers: “Why is this new widget such a piece?”
Wall Street: “ask the company”
Company: “tough markets means that nonvital secotors such as Research, Quality control and Customer service have been hurt yada yada yada….”
Real Reason : “China”.
Stock price doesnt move an inch.

All I have to say is that the day the yuan isnt dollar pegged is the day before alot of senior managers are gonna be on the hot seat as the quality went out the window, the customers are pissed, and the shit ante cheap anymore. Notice how the whole currency adjustment thing for China went out the window with the current downturn?

Wall Street to Fed: “What are you doing to control inflation?”
Fed: “China”

[DWCAP]

I am feeling you on that one FLU. Great, the computer only costs $500, but it is only gonna last me till 1 day after the 6 month warrenty ends.
Why is it that every company seems to scream from the highest mountain top all about how they source in China. There stuff sucks, even if it is cheap. And Wall street seems to reward them for this. What a load of crap. It is like a buzz word to investors.

Wall Street: “WHat are you doing to keep costs down?”
Company: “China”
Stock price goes up 5%

Wall street: “what are you doing to expand?”
Company: “China”
Stock pice goes up 5%

Wall Street “what is the future of your company?”
Company: “China”
Stock price goes up 5%

Customers: “Why is this new widget such a piece?”
Wall Street: “ask the company”
Company: “tough markets means that nonvital secotors such as Research, Quality control and Customer service have been hurt yada yada yada….”
Real Reason : “China”.
Stock price doesnt move an inch.

All I have to say is that the day the yuan isnt dollar pegged is the day before alot of senior managers are gonna be on the hot seat as the quality went out the window, the customers are pissed, and the shit ante cheap anymore. Notice how the whole currency adjustment thing for China went out the window with the current downturn?

Wall Street to Fed: “What are you doing to control inflation?”
Fed: “China”

[Arty]

I don’t know…the best laptop I want to buy is a Dell XPS1730 and Alienware M15x or M17x (not out yet). They aren’t cheap at all…:( And they are all from Dell.

Today’s computer cost as low as few hundred dollars to over 8,000. It all depends on what you want and have nothing to do with cheap part from China. The two laptops I mentioned above are probably all made in China cost at least 3000 minimum.

[Arty]

I don’t know…the best laptop I want to buy is a Dell XPS1730 and Alienware M15x or M17x (not out yet). They aren’t cheap at all…:( And they are all from Dell.

Today’s computer cost as low as few hundred dollars to over 8,000. It all depends on what you want and have nothing to do with cheap part from China. The two laptops I mentioned above are probably all made in China cost at least 3000 minimum.

[Arty]

I don’t know…the best laptop I want to buy is a Dell XPS1730 and Alienware M15x or M17x (not out yet). They aren’t cheap at all…:( And they are all from Dell.

Today’s computer cost as low as few hundred dollars to over 8,000. It all depends on what you want and have nothing to do with cheap part from China. The two laptops I mentioned above are probably all made in China cost at least 3000 minimum.

[Arty]

I don’t know…the best laptop I want to buy is a Dell XPS1730 and Alienware M15x or M17x (not out yet). They aren’t cheap at all…:( And they are all from Dell.

Today’s computer cost as low as few hundred dollars to over 8,000. It all depends on what you want and have nothing to do with cheap part from China. The two laptops I mentioned above are probably all made in China cost at least 3000 minimum.

[Author]

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