Posted on 07/03/2010 2:30:46 PM PDT by blam
With deflation, everything gets cheaper. Sounds like a good thing to me.
Google Rick Santelli and Rant of the Year :)
Your definitions and Q&A are spot-on.
I think the thing that’s missing from discussions of deflation is the question, ‘then what’?
Deflation from collapsing prices is one thing, but eventually the piper comes calling on all those loans and spending.
The US (and to be honest, municipalities, states and even individuals) have racked up unimaginable loan balances. The federal government is the only entity with the power to 1.) repudiate their loans or 2.) print their way out of them.
Since the states cannot print money, they can cut spending or raise taxes, but some, like Illinois are past the point where they can expect to raise enough money to become solvent. There isn’t enough tax-power to do it. And since states are willing to surrender their sovereignty to the feds in exchange for a bailout, I’d look for a short period of deflation followed by massive inflation.
And the longer Obama’s depression goes on the more money they’ll have to print because the states will be collapsing one after the other.
The only politically viable way for the feds to erase loans is to print money... and that is inflation.
My 2cents
You don’t remember the “rant”?
This is where it all began:
http://www.cnbc.com/id/15840232?video=1039849853
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