Paying Attention?

[CA renter]

[quote=briansd1][quote=sdduuuude]
Not so sure it staves it off. Possible that QE1 staves it off, and maybe even QE2, but the more you go into debt, the higher your interest payments. Get the interest too high and the likelihood of the deflationary collapse increases.
[/quote]

I’m confused how more QE (money printing) would cause a deflationary collape.

Dispite QE1 and QE2, interest rates are now lower. Quantitive Easing actually avoided a deflationary spiral.

[quote=sdduuuude]
I’m not a fan of either the deflationary spiral or hyper-inflation theories but I do think deflation has a bit part to play yet and could come back more than once in the next few years.
[/quote]

If deflation “has a big part to play and could come back more than once in the next few years,” then more QE is the way to address that deflation.

[quote=sdduuuude]
The more QE’s that we see, the harder it gets to pay those bills.[/quote]

If debt overhang is the problem, inflation is a good solution. Debt remains fixed so inflation makes it easier to pay off previously incurred debts.

Remember that QE is the Federal Reserve printing money, not the Federal Government selling more bonds.

Actually, while we are talking policy, the Federal government should borrow money very cheaply now to build infrastruture and stimulate the ecnomomy. Higher future rates will not be a problem if there’s a plan to pay down the debt once the economy recovers.[/quote]

That depends on who owes the debt, and who stands as the beneficiary of the QE. Americans are in debt at all levels — from the federal government, to the lowest workers. Unfortunately, the money that’s being printed is largely ending up in the hands of speculators in the financial industry — it is NOT ending up in the hands of those who owe the debt (government or workers). This will NOT help us pay off our debts. As a matter of fact, their gambling has been increasing prices for goods needed by those highly indebted workers, which makes it even more difficult for them to pay off their debt.

What we need is asset price deflation and a repudiation of a lot of our private debt, which will increase the purchasing power of U.S. workers. Wages are far stickier than asset prices, so **IF we allow the deflation to happen quickly,** I believe that workers will see their purchasing power increase, while still being able to hold onto their jobs. They might see wage decreases, but I believe that **if the deflation is allowed to happen quickly,** wages will go down at a slower pace than prices for goods. Corporations are sitting on record amounts of money, and have been making record profits — they have a buffer. Once prices have bottomed (they won’t go to zero, as there are always investors who are looking for an entry point, and there is a fundamental value for goods and services in an economy), investors will move in, true demand can be reassessed, and we can rebuild from a solid foundation.

[CA renter]

[quote=briansd1]CA renter, deflation affects wages as well.

Greece and Spain are prime examples of deflation. That’s their only way out because they can’t print money.

You might feel a little more secure because your family’s income is based on government union contracts which are hard to overturn, but deflation would affect all wage earners.

The truth is that there’s a glut of capacity out there; so there is hardly any inflation.

I content that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.

It’s true that central bank liquidity benefits the top earners more. But it’s better than nothing since the liquidity loss due to credit contraction must somehow be replaced to stabilize the economy.

Since there’s no appetite for fiscal stimulus, monetary policy is the only other tool.[/quote]

What’s going on in Greece and Spain are not examples of deflation as much as they’re examples of too much inflation — too much debt!!!! If they repudiate their debt and let asset prices fall, they will be able to turn their economy around.

The problem is that labor and capital are at odds. Who is going to bear the losses: the banks/lenders who would lose if the Greeks/Spaniards repudiate their debt, OR the workers/govt who owe that debt, and will be burdened with it for as long as they agree to pay it back? If they agree to pay off their debts, they will suffer greatly for many, many years. If they repudiate their debt, they will go through a period of economic pain, but will be able to heal much more quickly. The lenders will take a hit, but that won’t be the end of the world. Many countries (and companies, and individuals) have repudiated their debts, and they’ve been much healthier for it.

Inflation doesn’t work unless the additional money ends up in the hands of the debtors. So far, we haven’t had that (not much, at least). If they continue to inflate as they’ve been doing, it will make our situation far, far worse than it already is. They have managed to prolong the recession/depression and have made our debts even more unbearable.

You keep thinking they’ve “fixed” things by inflation. The debt downgrade and skyrocketing debt levels are proof that they have made it worse. It is worse today than it was in 2008 because of all of your beloved manipulations.

[CA renter]

[quote=briansd1]CA renter, deflation affects wages as well.

Greece and Spain are prime examples of deflation. That’s their only way out because they can’t print money.

You might feel a little more secure because your family’s income is based on government union contracts which are hard to overturn, but deflation would affect all wage earners.

The truth is that there’s a glut of capacity out there; so there is hardly any inflation.

I content that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.

It’s true that central bank liquidity benefits the top earners more. But it’s better than nothing since the liquidity loss due to credit contraction must somehow be replaced to stabilize the economy.

Since there’s no appetite for fiscal stimulus, monetary policy is the only other tool.[/quote]

What’s going on in Greece and Spain are not examples of deflation as much as they’re examples of too much inflation — too much debt!!!! If they repudiate their debt and let asset prices fall, they will be able to turn their economy around.

The problem is that labor and capital are at odds. Who is going to bear the losses: the banks/lenders who would lose if the Greeks/Spaniards repudiate their debt, OR the workers/govt who owe that debt, and will be burdened with it for as long as they agree to pay it back? If they agree to pay off their debts, they will suffer greatly for many, many years. If they repudiate their debt, they will go through a period of economic pain, but will be able to heal much more quickly. The lenders will take a hit, but that won’t be the end of the world. Many countries (and companies, and individuals) have repudiated their debts, and they’ve been much healthier for it.

Inflation doesn’t work unless the additional money ends up in the hands of the debtors. So far, we haven’t had that (not much, at least). If they continue to inflate as they’ve been doing, it will make our situation far, far worse than it already is. They have managed to prolong the recession/depression and have made our debts even more unbearable.

You keep thinking they’ve “fixed” things by inflation. The debt downgrade and skyrocketing debt levels are proof that they have made it worse. It is worse today than it was in 2008 because of all of your beloved manipulations.

[CA renter]

[quote=briansd1]CA renter, deflation affects wages as well.

Greece and Spain are prime examples of deflation. That’s their only way out because they can’t print money.

You might feel a little more secure because your family’s income is based on government union contracts which are hard to overturn, but deflation would affect all wage earners.

The truth is that there’s a glut of capacity out there; so there is hardly any inflation.

I content that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.

It’s true that central bank liquidity benefits the top earners more. But it’s better than nothing since the liquidity loss due to credit contraction must somehow be replaced to stabilize the economy.

Since there’s no appetite for fiscal stimulus, monetary policy is the only other tool.[/quote]

What’s going on in Greece and Spain are not examples of deflation as much as they’re examples of too much inflation — too much debt!!!! If they repudiate their debt and let asset prices fall, they will be able to turn their economy around.

The problem is that labor and capital are at odds. Who is going to bear the losses: the banks/lenders who would lose if the Greeks/Spaniards repudiate their debt, OR the workers/govt who owe that debt, and will be burdened with it for as long as they agree to pay it back? If they agree to pay off their debts, they will suffer greatly for many, many years. If they repudiate their debt, they will go through a period of economic pain, but will be able to heal much more quickly. The lenders will take a hit, but that won’t be the end of the world. Many countries (and companies, and individuals) have repudiated their debts, and they’ve been much healthier for it.

Inflation doesn’t work unless the additional money ends up in the hands of the debtors. So far, we haven’t had that (not much, at least). If they continue to inflate as they’ve been doing, it will make our situation far, far worse than it already is. They have managed to prolong the recession/depression and have made our debts even more unbearable.

You keep thinking they’ve “fixed” things by inflation. The debt downgrade and skyrocketing debt levels are proof that they have made it worse. It is worse today than it was in 2008 because of all of your beloved manipulations.

[CA renter]

[quote=briansd1]CA renter, deflation affects wages as well.

Greece and Spain are prime examples of deflation. That’s their only way out because they can’t print money.

You might feel a little more secure because your family’s income is based on government union contracts which are hard to overturn, but deflation would affect all wage earners.

The truth is that there’s a glut of capacity out there; so there is hardly any inflation.

I content that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.

It’s true that central bank liquidity benefits the top earners more. But it’s better than nothing since the liquidity loss due to credit contraction must somehow be replaced to stabilize the economy.

Since there’s no appetite for fiscal stimulus, monetary policy is the only other tool.[/quote]

What’s going on in Greece and Spain are not examples of deflation as much as they’re examples of too much inflation — too much debt!!!! If they repudiate their debt and let asset prices fall, they will be able to turn their economy around.

The problem is that labor and capital are at odds. Who is going to bear the losses: the banks/lenders who would lose if the Greeks/Spaniards repudiate their debt, OR the workers/govt who owe that debt, and will be burdened with it for as long as they agree to pay it back? If they agree to pay off their debts, they will suffer greatly for many, many years. If they repudiate their debt, they will go through a period of economic pain, but will be able to heal much more quickly. The lenders will take a hit, but that won’t be the end of the world. Many countries (and companies, and individuals) have repudiated their debts, and they’ve been much healthier for it.

Inflation doesn’t work unless the additional money ends up in the hands of the debtors. So far, we haven’t had that (not much, at least). If they continue to inflate as they’ve been doing, it will make our situation far, far worse than it already is. They have managed to prolong the recession/depression and have made our debts even more unbearable.

You keep thinking they’ve “fixed” things by inflation. The debt downgrade and skyrocketing debt levels are proof that they have made it worse. It is worse today than it was in 2008 because of all of your beloved manipulations.

[CA renter]

[quote=briansd1]CA renter, deflation affects wages as well.

Greece and Spain are prime examples of deflation. That’s their only way out because they can’t print money.

You might feel a little more secure because your family’s income is based on government union contracts which are hard to overturn, but deflation would affect all wage earners.

The truth is that there’s a glut of capacity out there; so there is hardly any inflation.

I content that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.

It’s true that central bank liquidity benefits the top earners more. But it’s better than nothing since the liquidity loss due to credit contraction must somehow be replaced to stabilize the economy.

Since there’s no appetite for fiscal stimulus, monetary policy is the only other tool.[/quote]

What’s going on in Greece and Spain are not examples of deflation as much as they’re examples of too much inflation — too much debt!!!! If they repudiate their debt and let asset prices fall, they will be able to turn their economy around.

The problem is that labor and capital are at odds. Who is going to bear the losses: the banks/lenders who would lose if the Greeks/Spaniards repudiate their debt, OR the workers/govt who owe that debt, and will be burdened with it for as long as they agree to pay it back? If they agree to pay off their debts, they will suffer greatly for many, many years. If they repudiate their debt, they will go through a period of economic pain, but will be able to heal much more quickly. The lenders will take a hit, but that won’t be the end of the world. Many countries (and companies, and individuals) have repudiated their debts, and they’ve been much healthier for it.

Inflation doesn’t work unless the additional money ends up in the hands of the debtors. So far, we haven’t had that (not much, at least). If they continue to inflate as they’ve been doing, it will make our situation far, far worse than it already is. They have managed to prolong the recession/depression and have made our debts even more unbearable.

You keep thinking they’ve “fixed” things by inflation. The debt downgrade and skyrocketing debt levels are proof that they have made it worse. It is worse today than it was in 2008 because of all of your beloved manipulations.

[SD Realtor]

“I contend that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.”

Whew, can’t wait until that weather gets better! What the heck were we all thinking….

[SD Realtor]

“I contend that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.”

Whew, can’t wait until that weather gets better! What the heck were we all thinking….

[SD Realtor]

“I contend that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.”

Whew, can’t wait until that weather gets better! What the heck were we all thinking….

[SD Realtor]

“I contend that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.”

Whew, can’t wait until that weather gets better! What the heck were we all thinking….

[SD Realtor]

“I contend that the food inflation we have seen is due mostly to bad weather and would have occurred anyway.”

Whew, can’t wait until that weather gets better! What the heck were we all thinking….

[CA renter]

Brian,

Do you honestly not understand that much of our debt crisis is tied to the bailouts (of all sorts)? Do you not understand that, if not for the bailouts, our public and private debt levels would be far, far lower?

We do not have a liquidity crisis — we have a SOLVENCY crisis. Until people understand that fact, we will be forced to endure a grinding, never-ending recession/depression with a worsening debt situation.

Name a single country that imploded, and never came back, because of deflation.

[CA renter]

Brian,

Do you honestly not understand that much of our debt crisis is tied to the bailouts (of all sorts)? Do you not understand that, if not for the bailouts, our public and private debt levels would be far, far lower?

We do not have a liquidity crisis — we have a SOLVENCY crisis. Until people understand that fact, we will be forced to endure a grinding, never-ending recession/depression with a worsening debt situation.

Name a single country that imploded, and never came back, because of deflation.

[CA renter]

Brian,

Do you honestly not understand that much of our debt crisis is tied to the bailouts (of all sorts)? Do you not understand that, if not for the bailouts, our public and private debt levels would be far, far lower?

We do not have a liquidity crisis — we have a SOLVENCY crisis. Until people understand that fact, we will be forced to endure a grinding, never-ending recession/depression with a worsening debt situation.

Name a single country that imploded, and never came back, because of deflation.

[CA renter]

Brian,

Do you honestly not understand that much of our debt crisis is tied to the bailouts (of all sorts)? Do you not understand that, if not for the bailouts, our public and private debt levels would be far, far lower?

We do not have a liquidity crisis — we have a SOLVENCY crisis. Until people understand that fact, we will be forced to endure a grinding, never-ending recession/depression with a worsening debt situation.

Name a single country that imploded, and never came back, because of deflation.

[Author]

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