Posted on 11/20/2008 10:49:24 AM PST by nickcarraway
Deflation is here and that's something we haven't experienced since the 1930s. Just this past summer, people were stewing about $150 oil and inflation. Now with oil at $53 a barrel that seems like ancient history, and people fear a deflationary spiral, whereby consumers stop consuming as they await cheaper prices. Repeat this ad infinitum, and you have the Great Depression. Certainly recent economic data points to cheaper prices. October's Producer Price Index was down 2.8%, the lowest on record.
But it should be noted, there are deflations and there are deflations. Claudio Borio and Andrew J. Filardo of the Bank for International Settlements assessed the records of deflations going back to the 19th century and found that they have generally gotten a bad rap. In fact during the 19th and early 20th centuries, they write, deflation was generally not associated with persistent and deep economic malaise. All it takes is one Great Depression and an economic phenomenon's reputation is ruined, it seems.
BuzzBorio and Filardo broke deflations into three categories, the good, the bad and the ugly. "Good" deflations can be linked to higher growth, bouncing asset prices and a nice rate of expansion of money and credit.
Unfortunately, the U.S. economy currently has the hallmarks of not-so-good deflation, including a significant increase in the ratio of credit to gross domestic product, large swings in property prices and an equity price boom on scale with the one that preceded the Great Depression.
While the Forbes.com Investor Team acknowledged that deflation is here, they differed on what it meant or how severe it might be. John Osbon, founder of Osbon Capital Management, says that the U.S.
(Excerpt) Read more at forbes.com ...
I doubt any of us will be seeing property tax cuts though.
oil was around $10 a barrel around 2000
“We are going to cut taxes for 95 percent of Americans,”
-Obama
I realize that the bubble has burst in the crude oil markets, but with our government bailing out everyone and his brother spending BILLIONS and BILLIONS of new printing press dollars, I just can’t see anything but inflation in store for us.
You said — “oil was around $10 a barrel around 2000”
Well, you’re wrong there, according to the following historical data on oil prices...
http://inflationdata.com/inflation/inflation_Rate/Historical_Oil_Prices_Table.asp
http://www.ioga.com/Special/crudeoil_Hist.htm
I have no idea where you got this information since it’s so far off-base from the real prices of that time. It varied from around $23 to around $31.
Inflation for sure.
Hyperinflation is possible too.
That's next. Give it 18 to 24 months.
Time to cut socialist farm subsidies.
Oil was ten cents a barrel in 1930 and they couldn’t even give it away.
I’ve already seen it. My home was taxed at almost $40,000 less than the previous year.
‘A tsunami of cash created by the wholesale flight from equities will eventually settle back to normal.’
Wanna bet? With D’ohbama implementing his ‘changes’, we’re perfectly happy sitting on the sidelines with our capital.
Cash is King!
You don’t have to be a weatherman to know which way the wind blows!!!
“I m not going to have to worry about paying for my house anymore, or putting gas in my car anymore”
That is why prices continue to fall.
As the Forbes article points out, all of that funny money may very well be a big problem down the road, but for now the bigger danger is the negative feedback loop call deflation.
Sometimes being simple-minded like I am is a blessing. But other times it is aggrivating.
Like Now. I can’t, for the life of me, understand why low consumer prices is a bad thing. Course I never studied economics so.....
We need to make sure everyone we discuss this with understands that this is Not the fault of the Republicans. The ecnominc decline is 100 percent Caused by Democrats.
If you don’t plan on moving, thats a good thing, right?
My house is down $10k. I pay less property tax. I don’t plan on selling so it can keep on dropping as far as I’m concerned.
But I’m no economist so I don’t understand the whole picture.
As long as you still have a job and/or you still have disposable income, "it ain't bad", otherwise . . .
Cheer up! If that is your goal, your expectations will be greatly exceeded.
Don't look for them until after a masive tax revott by the landed gentry.
Good news: Hamburger is a dollar a pound.
Bad news: You don’t have a dollar.
That clear it up for you?
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