[onlooker]

I would think in terms of basic economics the little guy who has no real assets would be more immediately impacted by inflation then deflation.

[AgentR11]

Nah, real assets appreciate with the inflation rate; the little guy will only get dinged when he sells to make a capital gain, and if he's making a capital gain large enough for the inflation part of the taxes to be annoying, there is no way in heck he's a "little guy". He might be a rich guy that likes to pretend he's a little guy; but that don't make it so.

The middle class guy with no significant real assets or liabilities, can get dinged pretty hard by inflation if his wage doesn't rise along with it; but if wages aren't rising, inflation won't hold.

[onlooker]

Yes but my point is that the common man has very few assets that he truly owns. A mortgaged house does NOT qualify. Dividends/stocks also can be considered only inactive assets particularly as they are tied up mostly in retirement plans. So the point is someone who lives paycheck to paycheck will be more and sooner impacted by inflation than deflation.

[Pops]

$this->bbcode_second_pass_quote('onlooker', 'S')o the point is someone who lives paycheck to paycheck will be more and sooner impacted by inflation than deflation.

[onlooker]

Inflation definition "a general increase in prices and fall in the purchasing value of money." It seems their are two or more definitions of inflation. I was referring to this quoted one. Again as people living/getting by on just their work/income will feel right away and intensely rises in prices and their relatively less buying power.

[kublikhan]

$this->bbcode_second_pass_quote('onlooker', 'I')nflation definition "a general increase in prices and fall in the purchasing value of money." It seems their are two or more definitions of inflation. I was referring to this quoted one. Again as people living/getting by on just their work/income will feel right away and intensely rises in prices and their relatively less buying power.

[Pops]

Instead of making the banks eat the losses on stupid mortgages and their derivatives, the Fed and Treasury bought them up, that was the trillion or whatever in "bailouts", buying up the non-performing assets and just holding them on the Feds balance sheet. The gov bought those "troubled assets" from the banks and made the banks leave the money on deposit with the Fed.

Now the banks look better 2 ways: a trillion less in worthless loans on their books and a trillion more in "reserves."

So if letting the money supply dry up was the thing that made the great depression - or at least made it great, then creating zombie assets on the feds books I think is the thing that is making the great recession linger. Better than a depression? I'm not sure yet.


The banks are now 40% larger than they were when they were merely too big to fail.They paid no price for their illegal dealings in the sub-prime scam and the taxpayers bailed them out, that is the very definition of socialized risk. No wonder Rs want to raid social security, gotta have the banks backs.

[Pops]

$this->bbcode_second_pass_quote('onlooker', 'I')nflation definition "a general increase in prices and fall in the purchasing value of money." It seems their are two or more definitions of inflation. I was referring to this quoted one. Again as people living/getting by on just their work/income will feel right away and intensely rises in prices and their relatively less buying power.

[Subjectivist]

Pops you and I and everyone alive today has lived our whole lives in a perpetual growth with inflationary growth of the money supply. That doesn't mean inflation is the only way growth can occur.

A deflationary economy can also experience growth, but the growth is in real assets, not in the bank balance sheet. People still have to pay their existing debts, and they they still have living expenses so they do not all buy home safes and lock their cash up as they earn it.

Runaway Deflation or Runaway Inflation both kill the value of things, but a modest 1-2 percent is hardly noticeable by the general public in either direction.

Before 1913 in North America the economy would cycle around a set point with about 5 years of inflation then about 5 years of deflation over and over and over. Then the concept of endless growth spurred on by fossil fuels took hold and the central banks and governments of the Western World decided that inflation was good and deflation was bad because a growing cash supply allowed governments to borrow money without worrying about ever paying off the debt and the banks as lenders get endless interest profit on that perpetual debt.

That is not a requirement, if is a feature of the endless growth on a finite world paradigm. You are aware of resource constraints but you write as if endless growth is the only viable model of economic activity. It is not. Endless growth is the logic of cancer, not the logic a highly intelligent man like yourself should be promoting.

[SeaGypsy]

I'm living in one of Keynes' dream States, Australia, where monetary policy modernised 30 odd years ago & we have had 2-3% inflation fairly steadily throughout, currently under 2% for the first time since. However, in the real world, wage inflation has nowhere near kept pace for the best part of the last 20 years, for the majority of workers. In my two main sectors- logistics & community services, hourly rates have gone up $5 in twenty years, while housing has quadrupled, somewhat offset by cheaper mass produced food & more efficient vehicles. Housing is the big one to watch, the main game everyone has some skin in. I guess what I'm getting at is in such a contrived market, some of the generalities about expected outcomes of inflation are hiding the fact that housing is sucking up virtually all surplus in service economies, with wages flatlining while investors bleed customers with little or no choice in the matter.

[Pops]

$this->bbcode_second_pass_quote('pstarr', 'T')hanks for answering my question, Pops. A few more:
$this->bbcode_second_pass_quote('Pops', '&')quot;The gov bought those "troubled assets" from the banks and made the banks leave the money on deposit with the Fed.

Now the banks look better 2 ways: a trillion less in worthless loans on their books and a trillion more in "reserves."

[Pops]

Sub, economics is just psychology with dollar signs, LoL. You are arguing a belief;
endless growth/finite world = bad,
good old days = good


The thing is, this ain't 1850.

I'm just relating how things are. Prior to 1850 and certainly 1750 population growth was low and the economy moved slow, it was all farming and handwork. governments and businesses did little, there was no investment to speak of because all the wealth was held in land. There was no need for a banking system, or any other system.
You worked, you ate, you slept, you died.

Until we return back to the good old days we are stuck suffering through the travails of the modern world.

[Subjectivist]

$this->bbcode_second_pass_quote('Pops', 'S')ub, economics is just psychology with dollar signs, LoL. You are arguing a belief;
endless growth/finite world = bad,
good old days = good


The thing is, this ain't 1850.

I'm just relating how things are. Prior to 1850 and certainly 1750 population growth was low and the economy moved slow, it was all farming and handwork. governments and businesses did little, there was no investment to speak of because all the wealth was held in land. There was no need for a banking system, or any other system.
You worked, you ate, you slept, you died.

Until we return back to the good old days we are stuck suffering through the travails of the modern world.

[AgentR11]

$this->bbcode_second_pass_quote('Pops', '*')The Fed doesn't keep it all in cash either I don't guess, it's just that they have the magic printing press.

[radon1]

$this->bbcode_second_pass_quote('AgentR11', '
')The middle class guy with no significant real assets or liabilities, can get dinged pretty hard by inflation if his wage doesn't rise along with it; but if wages aren't rising, inflation won't hold.

[Pops]

All true Agent. Bits are great as long as everything is hunky-dory.