Should We Be Scared of Deflation?

Should We Be Scared of Deflation?

And you thought low prices were a good thing.

Single Page
  • Martha C. White is a freelance writer in New York.

Comments

  • 4 Total
  • • Pending Comments 0
  • • Login or register to post comments
Submitted by joseph37 on Sat, 11/22/2008 - 3:35pm.

Japan

I don't know any economist who believes that low interest rates contributed to the deflation in Japan in the 1990s. That doesn't make any economic sense. Low interest rates expand the money supply and cause inflation. I don't know where the author is getting these theories.

Submitted by joseph37 on Sat, 11/22/2008 - 5:32am.

Interest Rates

There is a rather large mistake here in the basic economics she is discussing. Lower interest rates raise inflation. Monetary policy moves aimed at "staving off" inflation are higher interest rates like what Volcker used in the 80's. I can't imagine she didn't know this. It's probably just an unfortunate mixup.

Submitted by skydog on Sat, 11/22/2008 - 4:48am.

Hold on a minute

1. My wages aren't dropping, and I don't expect my boss to come around with a new contract for me to sign for less pay, either.

2. I don't own a house, so I am not watching my house value drop. Besides that, if I live in a house I don't need to worry about how much the "book" value is unless I am moving and need to sell it. Houses are not investments, they are shelter. IF the value of your house is going down, then local property taxes need to reflect that fact, otherwise you are being ripped off.

3. The stock market and 401k accounts are not indicators of inflation, prices for food, energy, commodities are indicators of inflation. The stock market in its present form is an indicator of SPECULATION. Sorry if the party is over for all those who thought they were rich because they had a million in the stock market. Hello, 1929: how stupid do you have to be, and how often do we need to relearn the same lessons? Twice in one century ought to do the trick, n'est ce pas?

4. There is no need to be "scared" of anything. This is typical mainstream media crap. If there is action to be taken, then take it. Fear will only blind you when clarity is needed.

People, don't fall for this tripe. You are being lied to, and this article is a great example of what I am talking about.

Submitted by RealConservative on Fri, 11/21/2008 - 9:40pm.

Deflation

Due to devious practices by the Republicans, inflation has been grossly understated over the past quarter century. We are still a long way from deflation. However, thanks to these fraudulent practices, the average American is much closer to going from eating steak to cat food than they are to experiencing real deflation.