Paying Attention?

[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.

[Arraya]

[quote=CA renter]

IMHO, deflation would help those who earn wages, while hurting those who own assets. It would reverse a lot of the damage that’s been done by the growing wealth/income gap between labor and capital, which is why I favor it.[/quote]

I think you may be simplifying it a little. Simply, it is a contraction of money and credit. I don’t think this would be expressed favorably towards the bottom half of the country. I think it would be expressed in lower wages, benefits, much higher unemployment and loss of safety nets. Yes, assets would drop dramatically decreasing our collective wealth perception and changing consumption behaviors.

The 2008-2009 crash was an epochal category 5 deflationary shit-storm that gave us a little taste. Employment, wages, assets, peoples consumptive behavior. This, in turn, deflates tax revenues with all the effects. Creating a “death spiral” until all the bad debt is flushed from the system. In this case there is so much bad debt that allowing it all to get flushed would have bankrupt about 90% of the banks in the western hemisphere. Which would have seized up global trade and essentially crashed the global economy in short order.

The main way they chose to stop it was by short-circuiting the default-credit contraction feedback. Meaning they disconnected the banks from the effects of their actions through a myriad of ways to maintain the credit system.

Now, this does not mean I favor what has been done nor do I think what they are doing will fix anything. You can’t stop the inevitable, only delay it while pretending it’s not….

[Arraya]

[quote=CA renter]

IMHO, deflation would help those who earn wages, while hurting those who own assets. It would reverse a lot of the damage that’s been done by the growing wealth/income gap between labor and capital, which is why I favor it.[/quote]

I think you may be simplifying it a little. Simply, it is a contraction of money and credit. I don’t think this would be expressed favorably towards the bottom half of the country. I think it would be expressed in lower wages, benefits, much higher unemployment and loss of safety nets. Yes, assets would drop dramatically decreasing our collective wealth perception and changing consumption behaviors.

The 2008-2009 crash was an epochal category 5 deflationary shit-storm that gave us a little taste. Employment, wages, assets, peoples consumptive behavior. This, in turn, deflates tax revenues with all the effects. Creating a “death spiral” until all the bad debt is flushed from the system. In this case there is so much bad debt that allowing it all to get flushed would have bankrupt about 90% of the banks in the western hemisphere. Which would have seized up global trade and essentially crashed the global economy in short order.

The main way they chose to stop it was by short-circuiting the default-credit contraction feedback. Meaning they disconnected the banks from the effects of their actions through a myriad of ways to maintain the credit system.

Now, this does not mean I favor what has been done nor do I think what they are doing will fix anything. You can’t stop the inevitable, only delay it while pretending it’s not….

[Arraya]

[quote=CA renter]

IMHO, deflation would help those who earn wages, while hurting those who own assets. It would reverse a lot of the damage that’s been done by the growing wealth/income gap between labor and capital, which is why I favor it.[/quote]

I think you may be simplifying it a little. Simply, it is a contraction of money and credit. I don’t think this would be expressed favorably towards the bottom half of the country. I think it would be expressed in lower wages, benefits, much higher unemployment and loss of safety nets. Yes, assets would drop dramatically decreasing our collective wealth perception and changing consumption behaviors.

The 2008-2009 crash was an epochal category 5 deflationary shit-storm that gave us a little taste. Employment, wages, assets, peoples consumptive behavior. This, in turn, deflates tax revenues with all the effects. Creating a “death spiral” until all the bad debt is flushed from the system. In this case there is so much bad debt that allowing it all to get flushed would have bankrupt about 90% of the banks in the western hemisphere. Which would have seized up global trade and essentially crashed the global economy in short order.

The main way they chose to stop it was by short-circuiting the default-credit contraction feedback. Meaning they disconnected the banks from the effects of their actions through a myriad of ways to maintain the credit system.

Now, this does not mean I favor what has been done nor do I think what they are doing will fix anything. You can’t stop the inevitable, only delay it while pretending it’s not….

[Arraya]

[quote=CA renter]

IMHO, deflation would help those who earn wages, while hurting those who own assets. It would reverse a lot of the damage that’s been done by the growing wealth/income gap between labor and capital, which is why I favor it.[/quote]

I think you may be simplifying it a little. Simply, it is a contraction of money and credit. I don’t think this would be expressed favorably towards the bottom half of the country. I think it would be expressed in lower wages, benefits, much higher unemployment and loss of safety nets. Yes, assets would drop dramatically decreasing our collective wealth perception and changing consumption behaviors.

The 2008-2009 crash was an epochal category 5 deflationary shit-storm that gave us a little taste. Employment, wages, assets, peoples consumptive behavior. This, in turn, deflates tax revenues with all the effects. Creating a “death spiral” until all the bad debt is flushed from the system. In this case there is so much bad debt that allowing it all to get flushed would have bankrupt about 90% of the banks in the western hemisphere. Which would have seized up global trade and essentially crashed the global economy in short order.

The main way they chose to stop it was by short-circuiting the default-credit contraction feedback. Meaning they disconnected the banks from the effects of their actions through a myriad of ways to maintain the credit system.

Now, this does not mean I favor what has been done nor do I think what they are doing will fix anything. You can’t stop the inevitable, only delay it while pretending it’s not….

[Arraya]

[quote=CA renter]

IMHO, deflation would help those who earn wages, while hurting those who own assets. It would reverse a lot of the damage that’s been done by the growing wealth/income gap between labor and capital, which is why I favor it.[/quote]

I think you may be simplifying it a little. Simply, it is a contraction of money and credit. I don’t think this would be expressed favorably towards the bottom half of the country. I think it would be expressed in lower wages, benefits, much higher unemployment and loss of safety nets. Yes, assets would drop dramatically decreasing our collective wealth perception and changing consumption behaviors.

The 2008-2009 crash was an epochal category 5 deflationary shit-storm that gave us a little taste. Employment, wages, assets, peoples consumptive behavior. This, in turn, deflates tax revenues with all the effects. Creating a “death spiral” until all the bad debt is flushed from the system. In this case there is so much bad debt that allowing it all to get flushed would have bankrupt about 90% of the banks in the western hemisphere. Which would have seized up global trade and essentially crashed the global economy in short order.

The main way they chose to stop it was by short-circuiting the default-credit contraction feedback. Meaning they disconnected the banks from the effects of their actions through a myriad of ways to maintain the credit system.

Now, this does not mean I favor what has been done nor do I think what they are doing will fix anything. You can’t stop the inevitable, only delay it while pretending it’s not….

[moneymaker]

Japan has not come back and I think we are headed in that direction as well.

[moneymaker]

Japan has not come back and I think we are headed in that direction as well.

[moneymaker]

Japan has not come back and I think we are headed in that direction as well.

[moneymaker]

Japan has not come back and I think we are headed in that direction as well.

[moneymaker]

Japan has not come back and I think we are headed in that direction as well.

[briansd1]

I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.

CA renter, Greece which is experiencing internal deflation has cut public employee wages about 15%. Pensions have also been cut. But asset prices denominated in a strong Euro have held more steady.

The truth is that deflation makes debts harder to pay, not easier. As far as repudiation of debt goes, it’s not possible to do so without giving up the collateral (houses).

Inflation is obviously the easier way to go. War-torn countries of Europe all inflated away to get from under their war-time debts.

In fact, even noble and royal families of Europe had their wealth wiped out because of inflation. Inflation spreads the pain more evenly because inflation requires that you continue to work, be productive, and earn cash. (Deflation protects those who already have wealth).

Also remember that an asset price collapse would affect pension funds which rely on their investment portfolios to pay out benefits. As you’ve said before, pension benefits were promised based on return on investment much more so than contribution. Defined benefits will have be reduced or canceled if there are no funds to pay them.

[briansd1]

I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.

CA renter, Greece which is experiencing internal deflation has cut public employee wages about 15%. Pensions have also been cut. But asset prices denominated in a strong Euro have held more steady.

The truth is that deflation makes debts harder to pay, not easier. As far as repudiation of debt goes, it’s not possible to do so without giving up the collateral (houses).

Inflation is obviously the easier way to go. War-torn countries of Europe all inflated away to get from under their war-time debts.

In fact, even noble and royal families of Europe had their wealth wiped out because of inflation. Inflation spreads the pain more evenly because inflation requires that you continue to work, be productive, and earn cash. (Deflation protects those who already have wealth).

Also remember that an asset price collapse would affect pension funds which rely on their investment portfolios to pay out benefits. As you’ve said before, pension benefits were promised based on return on investment much more so than contribution. Defined benefits will have be reduced or canceled if there are no funds to pay them.

[briansd1]

I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.

CA renter, Greece which is experiencing internal deflation has cut public employee wages about 15%. Pensions have also been cut. But asset prices denominated in a strong Euro have held more steady.

The truth is that deflation makes debts harder to pay, not easier. As far as repudiation of debt goes, it’s not possible to do so without giving up the collateral (houses).

Inflation is obviously the easier way to go. War-torn countries of Europe all inflated away to get from under their war-time debts.

In fact, even noble and royal families of Europe had their wealth wiped out because of inflation. Inflation spreads the pain more evenly because inflation requires that you continue to work, be productive, and earn cash. (Deflation protects those who already have wealth).

Also remember that an asset price collapse would affect pension funds which rely on their investment portfolios to pay out benefits. As you’ve said before, pension benefits were promised based on return on investment much more so than contribution. Defined benefits will have be reduced or canceled if there are no funds to pay them.

[briansd1]

I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.

CA renter, Greece which is experiencing internal deflation has cut public employee wages about 15%. Pensions have also been cut. But asset prices denominated in a strong Euro have held more steady.

The truth is that deflation makes debts harder to pay, not easier. As far as repudiation of debt goes, it’s not possible to do so without giving up the collateral (houses).

Inflation is obviously the easier way to go. War-torn countries of Europe all inflated away to get from under their war-time debts.

In fact, even noble and royal families of Europe had their wealth wiped out because of inflation. Inflation spreads the pain more evenly because inflation requires that you continue to work, be productive, and earn cash. (Deflation protects those who already have wealth).

Also remember that an asset price collapse would affect pension funds which rely on their investment portfolios to pay out benefits. As you’ve said before, pension benefits were promised based on return on investment much more so than contribution. Defined benefits will have be reduced or canceled if there are no funds to pay them.

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