Shiller: US could likely to fall into deflationary spiral ala Japan

[CA renter]

[quote=SD Transplant]Here is what Chris Martenson has to say on the subject 🙂

http://finance.yahoo.com/tech-ticker/article/535305/Inflation-or-Deflation%3F-%22Yes,%22-Says-Chris-Martenson,-Who-Sees-Stagflation-Coming

This second round of quantitative easing is meant to lower mortgage rates (boost the housing market) and increase demand for bank loans (grow the economy).

Yet many reading this must be thinking: What deflation? Prices of gasoline, food, health-care, education are all getting more expensive.

Ask Chris Martenson, inflation or deflation? The economic researcher responds, “Yes!”

“We’re seeing inflation in some areas and deflation in others,” he tells Tech Ticker in this clip. “We have powerful deflationary forces in play right now. It’s been well balanced, so far, by what the Fed has done.”

Martenson thinks we’re “dangerously close” to entering a stage of “stagflation” that crippled the economy and market in the 1970s. “It’s the worst of all possible worlds,” says Martenson. “(Stagflation) really squeezes the workers even harder than any other condition you can experience. Wages are weak. Job growth is weak. The main assets that the average person tends to hold like real estate – that’s going down. On the other side, we are seeing base inflation” in some commodities.

“Stagflation,” as defined by Investopedia, is: a condition of slow economic growth and relatively high unemployment — a time of stagnation — accompanied by a rise in prices, or inflation. The U.S. dealt with this in the 1970s when a recession was met with a spike in global oil prices.

With these risks on the horizon, Martenson is convinced a double-dip recession is imminent, if not already under way: “The early data is saying, ‘weakness still is here’ and we’re going to have to live with this for a while,” he says.

As a result, he’s convinced Fed chairman Ben Bernanke will continue to go back into his “tool box” in the near-term to try to help put the economy back on a path of inflation and growth. “All the signs are telling us that the Fed can go forward and expand their balance sheet and so far they’ve been able to get away with it,” he says.

But eventually, Martenson believes these actions to fight near-term problems will result in nearly insurmountable long-term dilemmas for the government[/quote]

Agree very much with this theory, and it IS the worst of all worlds for the vast majority of Americans.

[CA renter]

[quote=Nor-LA-SD-guy]This will not make me popular on this board but.

I think the only way to get the economy moving again is to get home prices back at peak pricing,
So how do they do that ?? who knows …

I don’t think anyone has the answer, me I would start by announcing that we were going to double the minimum wage over the next six months, then follow through, not that this would be fair or not lead to other problems but nothing is going to work until we are back at peak pricing.
There is no other way to unfreeze and collect enough taxes to get everything moving again.,[/quote]

I’m trying to follow the logic here. While I agree that higher wages would help, propping up housing prices at totally unaffordable levels (which sapped the consumers’ long-term ability to spend) would be the very worst mistake they could make.

If people could buy houses for a dollar, while their wages remained the same as today (just hypothetical here), it would free up so much cash that could be used to stimulate the real economy…and that spending wouldn’t have a debt offset that removes economic activity from the future.

How is more debt the answer to our debt saturation problem?

The answer to our problem is LOWER PRICES. It is the ONLY way to create a sustainable foundation — washed clean of the irresponsible misallocation of capital — from which we can build a truly healthy economy.

[CA renter]

[quote=Nor-LA-SD-guy]This will not make me popular on this board but.

I think the only way to get the economy moving again is to get home prices back at peak pricing,
So how do they do that ?? who knows …

I don’t think anyone has the answer, me I would start by announcing that we were going to double the minimum wage over the next six months, then follow through, not that this would be fair or not lead to other problems but nothing is going to work until we are back at peak pricing.
There is no other way to unfreeze and collect enough taxes to get everything moving again.,[/quote]

I’m trying to follow the logic here. While I agree that higher wages would help, propping up housing prices at totally unaffordable levels (which sapped the consumers’ long-term ability to spend) would be the very worst mistake they could make.

If people could buy houses for a dollar, while their wages remained the same as today (just hypothetical here), it would free up so much cash that could be used to stimulate the real economy…and that spending wouldn’t have a debt offset that removes economic activity from the future.

How is more debt the answer to our debt saturation problem?

The answer to our problem is LOWER PRICES. It is the ONLY way to create a sustainable foundation — washed clean of the irresponsible misallocation of capital — from which we can build a truly healthy economy.

[CA renter]

[quote=Nor-LA-SD-guy]This will not make me popular on this board but.

I think the only way to get the economy moving again is to get home prices back at peak pricing,
So how do they do that ?? who knows …

I don’t think anyone has the answer, me I would start by announcing that we were going to double the minimum wage over the next six months, then follow through, not that this would be fair or not lead to other problems but nothing is going to work until we are back at peak pricing.
There is no other way to unfreeze and collect enough taxes to get everything moving again.,[/quote]

I’m trying to follow the logic here. While I agree that higher wages would help, propping up housing prices at totally unaffordable levels (which sapped the consumers’ long-term ability to spend) would be the very worst mistake they could make.

If people could buy houses for a dollar, while their wages remained the same as today (just hypothetical here), it would free up so much cash that could be used to stimulate the real economy…and that spending wouldn’t have a debt offset that removes economic activity from the future.

How is more debt the answer to our debt saturation problem?

The answer to our problem is LOWER PRICES. It is the ONLY way to create a sustainable foundation — washed clean of the irresponsible misallocation of capital — from which we can build a truly healthy economy.

[CA renter]

[quote=Nor-LA-SD-guy]This will not make me popular on this board but.

I think the only way to get the economy moving again is to get home prices back at peak pricing,
So how do they do that ?? who knows …

I don’t think anyone has the answer, me I would start by announcing that we were going to double the minimum wage over the next six months, then follow through, not that this would be fair or not lead to other problems but nothing is going to work until we are back at peak pricing.
There is no other way to unfreeze and collect enough taxes to get everything moving again.,[/quote]

I’m trying to follow the logic here. While I agree that higher wages would help, propping up housing prices at totally unaffordable levels (which sapped the consumers’ long-term ability to spend) would be the very worst mistake they could make.

If people could buy houses for a dollar, while their wages remained the same as today (just hypothetical here), it would free up so much cash that could be used to stimulate the real economy…and that spending wouldn’t have a debt offset that removes economic activity from the future.

How is more debt the answer to our debt saturation problem?

The answer to our problem is LOWER PRICES. It is the ONLY way to create a sustainable foundation — washed clean of the irresponsible misallocation of capital — from which we can build a truly healthy economy.

[CA renter]

[quote=Nor-LA-SD-guy]This will not make me popular on this board but.

I think the only way to get the economy moving again is to get home prices back at peak pricing,
So how do they do that ?? who knows …

I don’t think anyone has the answer, me I would start by announcing that we were going to double the minimum wage over the next six months, then follow through, not that this would be fair or not lead to other problems but nothing is going to work until we are back at peak pricing.
There is no other way to unfreeze and collect enough taxes to get everything moving again.,[/quote]

I’m trying to follow the logic here. While I agree that higher wages would help, propping up housing prices at totally unaffordable levels (which sapped the consumers’ long-term ability to spend) would be the very worst mistake they could make.

If people could buy houses for a dollar, while their wages remained the same as today (just hypothetical here), it would free up so much cash that could be used to stimulate the real economy…and that spending wouldn’t have a debt offset that removes economic activity from the future.

How is more debt the answer to our debt saturation problem?

The answer to our problem is LOWER PRICES. It is the ONLY way to create a sustainable foundation — washed clean of the irresponsible misallocation of capital — from which we can build a truly healthy economy.

[Nor-LA-SD-guy]

Yea except that our cities and state budgets were set at peak housing tax intake levels, then you have all the people who cannot/will not sell or fix or doing anything much to their main expense (and the main revenue generator) until they are above the price they paid regardless if the house is underwater currently or not.

As an example: Most people are not going out to buy a new car unless they feel rich or they have no choice, and then they will buy less car ect…

[Nor-LA-SD-guy]

Yea except that our cities and state budgets were set at peak housing tax intake levels, then you have all the people who cannot/will not sell or fix or doing anything much to their main expense (and the main revenue generator) until they are above the price they paid regardless if the house is underwater currently or not.

As an example: Most people are not going out to buy a new car unless they feel rich or they have no choice, and then they will buy less car ect…

[Nor-LA-SD-guy]

Yea except that our cities and state budgets were set at peak housing tax intake levels, then you have all the people who cannot/will not sell or fix or doing anything much to their main expense (and the main revenue generator) until they are above the price they paid regardless if the house is underwater currently or not.

As an example: Most people are not going out to buy a new car unless they feel rich or they have no choice, and then they will buy less car ect…

[Nor-LA-SD-guy]

Yea except that our cities and state budgets were set at peak housing tax intake levels, then you have all the people who cannot/will not sell or fix or doing anything much to their main expense (and the main revenue generator) until they are above the price they paid regardless if the house is underwater currently or not.

As an example: Most people are not going out to buy a new car unless they feel rich or they have no choice, and then they will buy less car ect…

[Nor-LA-SD-guy]

Yea except that our cities and state budgets were set at peak housing tax intake levels, then you have all the people who cannot/will not sell or fix or doing anything much to their main expense (and the main revenue generator) until they are above the price they paid regardless if the house is underwater currently or not.

As an example: Most people are not going out to buy a new car unless they feel rich or they have no choice, and then they will buy less car ect…

[Arraya]

It’s kind of an irreconcilable contradiction. Lowering prices cause systemic banking-state budget problems while keeping them high saps consumer spending. So they try keep prices elevated while using borrowed money to keep it going. We’re in a corner and it wont last.

[Arraya]

It’s kind of an irreconcilable contradiction. Lowering prices cause systemic banking-state budget problems while keeping them high saps consumer spending. So they try keep prices elevated while using borrowed money to keep it going. We’re in a corner and it wont last.

[Arraya]

It’s kind of an irreconcilable contradiction. Lowering prices cause systemic banking-state budget problems while keeping them high saps consumer spending. So they try keep prices elevated while using borrowed money to keep it going. We’re in a corner and it wont last.

[Arraya]

It’s kind of an irreconcilable contradiction. Lowering prices cause systemic banking-state budget problems while keeping them high saps consumer spending. So they try keep prices elevated while using borrowed money to keep it going. We’re in a corner and it wont last.

[Author]

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