Visual Inflation/Deflation For Dummies

[CA renter]

[quote=Arraya]
Define end of the world;)

IMO, deflation is unavoidable and will bring an incredible amount of social stress. The likes of which we have never seen before. All they are doing now is delaying the inevitable while making things worse and wishing for a miracle.[/quote]

Totally agree with prolonging the inevitable and making it worse.

The reason I’d go along with direct, govt loans and work programs would be to help ameliorate the social problems, and to allow the more productive parts of the economy to be somewhat sustained through the deflation, even if it’s slower/lower than some might like.

[CA renter]

[quote=AN][quote=CA renter][quote=AN]CAR, has there ever been a time where there’s nominal wage decline but the economy as a whole experience inflation?[/quote]

We’ve certainly had periods where wage increases ran behind inflation, so there were real wage declines.

http://monetaryfreedom-billwoolsey.blogspot.com/2010/02/wages-nominal-and-real-in-great.html

Some (like myself) would argue that in just these past few years, prices have risen while wages declined. We also have to consider rising unemployment when considering what happens to wages, as the lower-end employees tend to be laid off sooner than the higher ones, making it look like wages are steady or rising, when in fact they might be declining. I haven’t looked into the methodology yet, so not sure if they take unemployment into account and how that might affect wages as different populations are laid off at different times.[/quote]
Key word here is inflation adjusted wages vs nominal wages. Since debt of things like houses are usually bought with fixed rate, as long as nominal wages are rising, wouldn’t it make servicing these debts easier?[/quote]

But you’re forgetting the other half of the equation — the new buyers needed to sustain housing prices. Each new buyer will be taking on more debt with less powerful income. At some point, that can no longer be sustained, and you get a foreclosure “crisis,” just like we have now.

[CA renter]

[quote=AN][quote=CA renter][quote=AN]CAR, has there ever been a time where there’s nominal wage decline but the economy as a whole experience inflation?[/quote]

We’ve certainly had periods where wage increases ran behind inflation, so there were real wage declines.

http://monetaryfreedom-billwoolsey.blogspot.com/2010/02/wages-nominal-and-real-in-great.html

Some (like myself) would argue that in just these past few years, prices have risen while wages declined. We also have to consider rising unemployment when considering what happens to wages, as the lower-end employees tend to be laid off sooner than the higher ones, making it look like wages are steady or rising, when in fact they might be declining. I haven’t looked into the methodology yet, so not sure if they take unemployment into account and how that might affect wages as different populations are laid off at different times.[/quote]
Key word here is inflation adjusted wages vs nominal wages. Since debt of things like houses are usually bought with fixed rate, as long as nominal wages are rising, wouldn’t it make servicing these debts easier?[/quote]

But you’re forgetting the other half of the equation — the new buyers needed to sustain housing prices. Each new buyer will be taking on more debt with less powerful income. At some point, that can no longer be sustained, and you get a foreclosure “crisis,” just like we have now.

[CA renter]

[quote=AN][quote=CA renter][quote=AN]CAR, has there ever been a time where there’s nominal wage decline but the economy as a whole experience inflation?[/quote]

We’ve certainly had periods where wage increases ran behind inflation, so there were real wage declines.

http://monetaryfreedom-billwoolsey.blogspot.com/2010/02/wages-nominal-and-real-in-great.html

Some (like myself) would argue that in just these past few years, prices have risen while wages declined. We also have to consider rising unemployment when considering what happens to wages, as the lower-end employees tend to be laid off sooner than the higher ones, making it look like wages are steady or rising, when in fact they might be declining. I haven’t looked into the methodology yet, so not sure if they take unemployment into account and how that might affect wages as different populations are laid off at different times.[/quote]
Key word here is inflation adjusted wages vs nominal wages. Since debt of things like houses are usually bought with fixed rate, as long as nominal wages are rising, wouldn’t it make servicing these debts easier?[/quote]

But you’re forgetting the other half of the equation — the new buyers needed to sustain housing prices. Each new buyer will be taking on more debt with less powerful income. At some point, that can no longer be sustained, and you get a foreclosure “crisis,” just like we have now.

[CA renter]

[quote=AN][quote=CA renter][quote=AN]CAR, has there ever been a time where there’s nominal wage decline but the economy as a whole experience inflation?[/quote]

We’ve certainly had periods where wage increases ran behind inflation, so there were real wage declines.

http://monetaryfreedom-billwoolsey.blogspot.com/2010/02/wages-nominal-and-real-in-great.html

Some (like myself) would argue that in just these past few years, prices have risen while wages declined. We also have to consider rising unemployment when considering what happens to wages, as the lower-end employees tend to be laid off sooner than the higher ones, making it look like wages are steady or rising, when in fact they might be declining. I haven’t looked into the methodology yet, so not sure if they take unemployment into account and how that might affect wages as different populations are laid off at different times.[/quote]
Key word here is inflation adjusted wages vs nominal wages. Since debt of things like houses are usually bought with fixed rate, as long as nominal wages are rising, wouldn’t it make servicing these debts easier?[/quote]

But you’re forgetting the other half of the equation — the new buyers needed to sustain housing prices. Each new buyer will be taking on more debt with less powerful income. At some point, that can no longer be sustained, and you get a foreclosure “crisis,” just like we have now.

[CA renter]

[quote=AN][quote=CA renter][quote=AN]CAR, has there ever been a time where there’s nominal wage decline but the economy as a whole experience inflation?[/quote]

We’ve certainly had periods where wage increases ran behind inflation, so there were real wage declines.

http://monetaryfreedom-billwoolsey.blogspot.com/2010/02/wages-nominal-and-real-in-great.html

Some (like myself) would argue that in just these past few years, prices have risen while wages declined. We also have to consider rising unemployment when considering what happens to wages, as the lower-end employees tend to be laid off sooner than the higher ones, making it look like wages are steady or rising, when in fact they might be declining. I haven’t looked into the methodology yet, so not sure if they take unemployment into account and how that might affect wages as different populations are laid off at different times.[/quote]
Key word here is inflation adjusted wages vs nominal wages. Since debt of things like houses are usually bought with fixed rate, as long as nominal wages are rising, wouldn’t it make servicing these debts easier?[/quote]

But you’re forgetting the other half of the equation — the new buyers needed to sustain housing prices. Each new buyer will be taking on more debt with less powerful income. At some point, that can no longer be sustained, and you get a foreclosure “crisis,” just like we have now.

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