Deflation

[ratcheer]

But deflation also means less jobs and less credit for small businesses which means less business expansion and again less jobs.

Yes, much less jobs, even worse than the current situation. Money will be worth more, but it will be much harder to get. Even if it doesn't become a full-blown depression, it will feel like one to a huge number of people.

Also, it is difficult for central banks to fight deflation, because their tool (interest rates) will already be at the floor of absolute zero, i.e., they cannot lower them below zero. We are very, very close to it, now.

Tim

[sgreger1]

Yes, much less jobs, even worse than the current situation. Money will be worth more, but it will be much harder to get. Even if it doesn't become a full-blown depression, it will feel like one to a huge number of people.

Also, it is difficult for central banks to fight deflation, because their tool (interest rates) will already be at the floor of absolute zero, i.e., they cannot lower them below zero. We are very, very close to it, now.

Tim

Deflation is the most toxic enemy of an economic model like the one we have in the US. Our business model from corporations, to banks, and all the way to the federal government relies on us growing at least a certain amount each year. It's bad enough when we stop growing, but when we start going in reverse it literally destroys us.


Money will be worth more, which is why I say having no debt and staying liquid is a smart move, but again it means less jobs and less money circulating in the economy, so once it hits it will be MUCH more difficult to get money since you likely will not have a job.

I am positive that we will see some amount of deflation. We havn't had a significant period of deflation for a long time, but I think we've finally done it this time around. And furthermore, deflation hurts us more since it affects our business relationships with other countries. Luckily they are going to have to go through the same problems.

It's like social security; because of the recession I was reading in the news earlier that less people are having kids. Social Security and medicare are based on the assumption that the population will stay the same or increase each generation. The first time you have more people retired than people paying into the system, you'r in trouble. We are only a decade or so away from that, depending on how things turn out with this great recession.

[ratcheer]

Don't feel too bad. I lost my 6-figure job last November.

Tim

[PipenSnus]

I think the big question is whether the deflation will be like a bubble bursting, or like slowly letting the air out of a balloon. If the former, we'll definitely be in a Second Great Depression. In fact, some economists are daring to use the "D word" now. If deflation is a slow process, it will still be painful, but there will be less harm done. Unfortunately, I think the people in charge of economic policy don't know or don't care to know how to make that happen. They and their banker friends are sitting pretty.

[sgreger1]

Don't feel too bad. I lost my 6-figure job last November.

Tim

Wow man that is absolute shit. I'm in a situation like that, my wife just started working at this company and suddenly we have all this money and all those years of waiting for her to finish college are finnaly paying off. That is, untill she realizes that she is allergic to one of the epoxy resins that is the staple of the entire company. So now she has this insane case of contact dermatitis that cannot be cured and she is going to have to quit this week or next. Sigh.. ain't that how the wind always blows.



I am curious what would happen if like half the country lost their jobs. Once the government runs out of handouts, what will people do? It's kind of a unique scenario. In the great depression, lots of people were farmers and could at least eat. We don't have that anymore. Plus, we aren't ruled by communists, so it won't be like the soviet union either. It will be a bunch of capitalist with no work and anger at the government. This will either lead to a great time of growth, prosperity and and small business inovation, where americans band together and pull each other up by the bootstraps and make it work, proving that the American people are extremely resilient go-getters like we were in the past, or it will devolve down to massive civil unrest where martiall law and anarchy break out and it starts looking like Rwanda around here.


Either way...

[sgreger1]

I think the big question is whether the deflation will be like a bubble bursting, or like slowly letting the air out of a balloon. If the former, we'll definitely be in a Second Great Depression. In fact, some economists are daring to use the "D word" now. If deflation is a slow process, it will still be painful, but there will be less harm done. Unfortunately, I think the people in charge of economic policy don't know or don't care to know how to make that happen. They and their banker friends are sitting pretty.

I think this is what the plan was for the stiumulis. They know we are going to crash, so they are trying to ease it in instead of letting it all happen too quickly. That hasn't worked, the money is almost gone, interest rates are extremely low, and today Bernanke says he is thinking about loaning banks money at 0% interest. There is no more aces up anyones sleeves, no more tools are at our disposal to slow this down. It will go into freefall after the elections.

I think it will happen more quickly as time goes on unless something changes.

[PipenSnus]

They should have never followed the "too big to fail" theory. Let the banks (especially the investment banks) collapse, seize the assets, and use them for economic stimulus. Government shouldn't be kowtowing to corporate interests in the first place. That's what got us into this mess.

[sgreger1]

They should have never followed the "too big to fail" theory. Let the banks (especially the investment banks) collapse, seize the assets, and use them for economic stimulus. Government shouldn't be kowtowing to corporate interests in the first place. That's what got us into this mess.

Well the Obama admin is verry arrogant. They though everyone else had done a terrible job and they were going to come in, fix everything, and then be praised for their efforts. Instead, most of their plans have eitehr not worked well or backfired entirely and people hate him much more than they hated previous presidents. He talked a big game but so far is just a rookie in the commanders seat so he is too busy putting out fires to do anything that is going to have any real effect on the evonomy (in a positive way at least).

Not his fault, people elected a rookie, they got a Rookie. The worse news is that the republicans will likely regain control of the house and senate this election. They republicans are NOT rookies, the problem is that instead of being rookies, they are artfull in the craft of ****ing up an already bad situation, then fighting to the death while the house burns down with everyone inside.


No matter what happens in this next election, we do not have the kind of leaders necessary to get us out of this. Success will come either from individuals banding together at the community level and figuring it out, or it will degrade into long term unemployment in the 20's coupled with a stagnant economy, deflation, and eventually massive civil unrest.

[f. bandersnatch]

What is all this "we" talk. You mean that if you are right then the man that signs your check will get 170 million.

.

[truthwolf1]

or it will devolve down to massive civil unrest where martiall law and anarchy break out and it starts looking like Rwanda around here.

I agree with a massive crime wave from Celente's predictions. It will probably look like the aftermath of "Katrina" in most urban areas. Old people getting beat up, children/family members being raped, grocery stores broken into, riots in the government food lines.

[sgreger1]

What is all this "we" talk. You mean that if you are right then the man that signs your check will get 170 million.

.

No, actually the company will get 9 billion. Contrary to some of the people on this forum and elsewhere in society, I do not root for my evil corporate masters to go bankrupt, because my company is very good to it's employees and they sign my checks. If they don't take losses than I directly benefit by being able to retain my employment and get my annual merit increase and bonus.