Deflation... yes...

[aeghrur]

So... what do you guys think about deflation?
Do you think it's a good thing or a bad thing?
Think the economy's going back to normal or simply getting worse?
I must say deflation doesn't look that good in my mind simply because it means demand for supplies is dropping coupled along with the fact that people are losing jobs(unemployment rate high) and that the economy isn't going so hot.
Right now, people need to spend money, not save it, but deflation shows they are probably trying to save it.

Now, how do you propose to stop that if you think deflation is bad?
I would say, economic stimulus. You need to give people to the lower class and give them a little tax break so they can spend money and have it flowing back into the economy again. Also, a little more taxes on richer people so again, money flows back into the economy. Of course, too high of an inflation rate isn't good, but to me, the current deflation isn't any better.

Anyhow, discuss.

 

[SwordmasterXXXI]

The economy is getting worse as we speak. I'd probably give more money to the poor. Basicly the same as you. Too Canada's goverment is crap, though.

 

[zrky]

Really like you said their needs to be stimulus to just get people to spend their money. For the fact that people don't spend their money as much as the used to is the biggest problem so yeah, getting money to flow is the most important thing for the economy in my opinion.

 

[Crimson King]

There was an economic stimulus and it failed exponentially because people don't want to spend free money given to them in times of economic down tides. In fact, the concept OF an economic stimulus is stupid because you are borrowing/printing money which devalues the dollar, and you end up more broke than before.

 

[zrky]

What I meant by stimulus is not as in "Hey, you want free money OK, now go spend it." What I meant was to have some sort of way in which people would want to spend their money instead of stashing all of their money for retirement, this way money can flow and then prices don't go up.
There is a circle going that is because people on TV said to save your money instead of spending it, well look what that did, the products that we used to buy for $1 went to $1.25 because since there was no money going around people increase their price to deal with that, the prices get higher and people spend even less money, so then the chips that cost $1.25 went to $1.80 and so on. So I didn't mean economic stimulus as in the government giving tax breaks or free checks.

 

[manhunter098]

What I meant by stimulus is not as in "Hey, you want free money OK, now go spend it." What I meant was to have some sort of way in which people would want to spend their money instead of stashing all of their money for retirement, this way money can flow and then prices don't go up.
There is a circle going that is because people on TV said to save your money instead of spending it, well look what that did, the products that we used to buy for $1 went to $1.25 because since there was no money going around people increase their price to deal with that, the prices get higher and people spend even less money, so then the chips that cost $1.25 went to $1.80 and so on. So I didn't mean economic stimulus as in the government giving tax breaks or free checks.

Walmart gift cards for everyone!

 

[aeghrur]

Walmart gift cards for everyone!

GOOD IDEA! lol.
Also, even if an economic stimulus makes you end with more debt than before, it can jump start the economy so our debt won't become deficit. In my books, more debt is better than deficit.

 

[pyrotek7x7]

Over the past several years of economic decline, citizens have re-learned to save their money. Everyone realizes there IS an economic decline, and saves money for that reason, making the economy even worse. Similar to the Great Stock Market Crash, but over a larger time length. Instead of stocks lowering in value and everyone trying to sell sell sell, the economy is lowering in value and everyone tries to save save save what they have.

 

[Darxmarth23]

well.....

Over the past several years of economic decline, citizens have re-learned to save their money. Everyone realizes there IS an economic decline, and saves money for that reason, making the economy even worse. Similar to the Great Stock Market Crash, but over a larger time length. Instead of stocks lowering in value and everyone trying to sell sell sell, the economy is lowering in value and everyone tries to save save save what they have.

I believe that you are correct.

Sort of.

I think that since the Economy is bad and that people are aware the will save their $.

I believe that This would however only stall the process of a sinking economy.

We have to use a little bit of both methods to turn ourselves around.

If everyone on main street saves and spends as lottle as they can, then wall street wouldn't do well, right?

hmm...this makes me wonder....would the bail out bill be more effective later than now?

Once we save and ruin wall street a bit(okay...maybe no Ruin ) ,AND then the bail out was placed then the CEOs of the companies would'nt spend on cruise liners.

I believe i have stated my point. Im not too good on the economy though...

 

[pyrotek7x7]

Nothing against your theory, it's intriguing. But could you go more into depth about how saving money stalls the declining economy rather than accelerating it? I don't see how, and I'm not aware of any past examples that can prove it.

 

[Darxmarth23]

Nothing against your theory, it's intriguing. But could you go more into depth about how saving money stalls the declining economy rather than accelerating it? I don't see how, and I'm not aware of any past examples that can prove it.

Oh, yes. Of course.

To my understanding of the Economy(Don't think i know much. I'm only 14), Saving = Not spending. Not spending = Wall street only slows down a bit in sinking down.

By saving ppl start to think "ah, we don't need that car. Its too expencive." and "we don't need that house, we have loans to pay."

The Loaning companies gave loans to people who can't pay them. Eventually the companies started to get a loss. Other companies (not loaning comps) Have invested, or have ussually made some sort of deal with at least one loaning company. When the loaning companies do bad( the ppl who have loans have had bad credit; they can't pay) so do the companies who have invested, but only by a little bit.

This Little bit makes them increase the prices of their products a little bit more.

This makes us save a little bit more.

When we save the main street (us, and small businesses who haven't been screwed over yet) stays safe a little bit.

It turns the curve on the graph from a steep downhill curve to a shallower curve.

This is just my interpretation. This is how it apears to me. I could be wrong.

I hope this helps. I don't have good english... and i had to type this really fast( as fast as i could with a broken hand).

I apoligize for any mistakes.

 

[pyrotek7x7]

That makes a lot more sense. I never took loaning companies and others into account and how they affected the economy.

However, if saving money "slows down economic decline," then what does spending do? Make it worse? As I believe you stated, "We have to use a little bit of both methods to turn ourselves around." Are you implying that people should save what they need to pay off necessary loans and debts while spending other money to stimulate supply and demand?

 

[aeghrur]

Hm, to my knowledge, the loaning companies don't really care if they get payed for the loans or not, they sold it to the investors. =/ So, the loaning companies don't suffer, but rather, the investors do. Also, the people don't say, "we don't need this, we don't need that." They think, hey look, it's cheap now, who cares for my debt, I can pay it off eventually, lemme loan some money, buy this, pay it off when money inflates, and make a deal. What goes wrong is they lose their job because of deflation, lower demand, companies don't need as much people to make the lesser amount of supplies, so whack, no job, more deficit. Then, the investors of the loaning companies get all scared, they stop buying loans. Loaning companies don't want that responsibility of making sure people pay for their loans, they wanna make quick money off investors buying those loans. So they make less loans, and the people who need it, the small businesses who need it to start, continue to work, and those people who can actually pay the stuff won't be able to get the credit or loan they need. So, basically, what's happened is, the credit market froze up like right now. I think this is how it goes, but feel free to correct me if I'm wrong.

Now, in your case where people will spend less, and save more, the manufacturers won't raise the prices. That just kills their business even more as less people will buy it, so they raise it again. What they're doing right now is lowering the prices as people are more hesitant to buy it. Then, since the lower prices cause less income, they can't pay as much workers. They kill off workers, the workers have less money to spend, so more people save more and buy less. Vicious circle?

 

[Darxmarth23]

That makes a lot more sense. I never took loaning companies and others into account and how they affected the economy.

However, if saving money "slows down economic decline," then what does spending do? Make it worse? As I believe you stated, "We have to use a little bit of both methods to turn ourselves around." Are you implying that people should save what they need to pay off necessary loans and debts while spending other money to stimulate supply and demand?

Now take into account that some ppl in america still have an income.

Exactly like you said. Save on the goods. Spend on the needs. Ths is the slow process of how to turn the economy around. In my eyes, the people are a bit more to blame.

That is what my government teacher told me. I had debated about this i school too.

Hm, to my knowledge, the loaning companies don't really care if they get payed for the loans or not, they sold it to the investors. =/ ...(really good points)

The loaning companies give the loan that they were asked to give. Obviuosly like any other loaner they want the money back. with intrest.

The ppl who got the loan cant pay it back because in stead of paying what they needed to pay(before this economic meltdown) they spent the money on something unnecessary.

Like, for instance, a car you bought. You payed it with the loan for your house. Now you need that money for your house. But you can't get it because you still haven't payed off the loan for your car. The loaning companies want their money back so eventually you get booted out of your house to pay off the loan.

Now you live in your car.

This screw up is part of the govenments fault too. The gov should have checked the Loaners too, to see if they were giving loans to people who can afford them.

They weren't. They were giving to people who can't. ie the ppl with bad credit scores.

Now the loaning company has you house and you are cussin em out in your car.

The loaning companies have this property that is worth a bit more that the loan that they gave. That's good for them right?

Wrong. They have this property that they can't use. The property isn't benefiting them in any way. This means that in order to make up for the loan and they have to sell it to the bank. The bank is gonna buy for a really low price, lower than the loan they lost.
The company ends up having a loss.
You end up living in your car.

Now your manufacturing job had been shifted overseas to china for cheap labor. you get layed off.

You now live in your car, and have no job. life sucks for you man.

that is my understanding.

Yes my friend, it is a vicious circle..

 

[illinialex24]

I think deflation could be good for a select few but would hurt many who have little saved.

 

[Darxmarth23]

I think deflation could be good for a select few but would hurt many who have little saved.

Which is like 90% of america. you got it dead on.

 

[illinialex24]

Which is like 90% of america. you got it dead on.

Exactly. I am in my view altruistic because it would help my family out a fair amount but I am repulsed by the idea of deflation. Even though it would help my family, why should the wealthier get a break in hardship and even get much richer because of it while the poor suffer.

 

[aeghrur]

Exactly. I am in my view altruistic because it would help my family out a fair amount but I am repulsed by the idea of deflation. Even though it would help my family, why should the wealthier get a break in hardship and even get much richer because of it while the poor suffer.

While I would agree, I would rather argue for argument's sake.

Now, are you saying that the wealthy don't deserve to be wealthy? Because they did work to get there. Why should they have to give more money to pay for the same services everyone deserves? Why should they have to pay more money just to give it to some people who don't even do anything? If you got an A and someone else got a C, would you be happy if someone changed it so you had a B+ and they got a C+ while doing less work than you? No, they don't deserve that C+ while you deserve that A. Why should I have to give up something I worked hard for just so some lazy bums can have a little more money? They should have worked harder and made better choices in life.

 

[illinialex24]

While I would agree, I would rather argue for argument's sake.

Now, are you saying that the wealthy don't deserve to be wealthy? Because they did work to get there. Why should they have to give more money to pay for the same services everyone deserves? Why should they have to pay more money just to give it to some people who don't even do anything? If you got an A and someone else got a C, would you be happy if someone changed it so you had a B+ and they got a C+ while doing less work than you? No, they don't deserve that C+ while you deserve that A. Why should I have to give up something I worked hard for just so some lazy bums can have a little more money? They should have worked harder and made better choices in life.

I don't believe in extreme wealth no matter how successful you are. The rich will still stay rich if the currency stays the same and the poor will still be poorer, but if currency starts deflating, then the rich have a lot more purchasing power compared to before and become a lot richer than before, because of no success of their own except for having the money in the first place while the poor have almost nothing. I believe that there should be rewards for success, but that the playing field should be leveled out. I.e., saying success is the only indicator of hard work is a fallacy, many people who work hard never see any success because they get a severely lacking education and therefore cannot succeed or never get the opportunity to succeed in corporate America. Although some do succeed, so its not a trap, its just harder for them to succeed so you will be punishing hard workers as well as bad workers. Both groups (rich and poor) have those who work hard and those who don't, so why reward each group collectively regardless of how much they contribute to society.

 

[Darxmarth23]

Because while a lot of ppl screwed up and we're having an economic crisis, i think it is reasonable for ppl who have money to loan(isn't that word familiar) to others to get this mess staightened out. As long as they get it back.

Of course the ppl reciving the money would spend it on gas for the new car they live in.

We return to the vicious cycle again.

There are very small windows of oppertuniy for these types of things and we have to nail them hard.

 

[illinialex24]

Because while a lot of ppl screwed up and we're having an economic crisis, i think it is reasonable for ppl who have money to loan(isn't that word familiar) to others to get this mess staightened out. As long as they get it back.

Of course the ppl reciving the money would spend it on gas for the new car they live in.

We return to the vicious cycle again.

There are very small windows of oppertuniy for these types of things and we have to nail them hard.

Yeah there is truly no good solution as of yet. The question is whether the government should do whats in the people's interest, its own interest for its survival (the long run people's interest), a mixture of both or what.

 

[Darxmarth23]

Yeah there is truly no good solution as of yet. The question is whether the government should do whats in the people's interest, its own interest for its survival (the long run people's interest), a mixture of both or what.

I say a mixture of both.

Short term to survive now.

Long term after that to keep us going.

 

[illinialex24]

I say a mixture of both.

Short term to survive now.

Long term after that to keep us going.

Yeah, it is undoubtedly some mixture. But there is no good recipe yet. I don't think we need something as radical as the New Deal but... who knows.

 

[Darxmarth23]

Yeah, it is undoubtedly some mixture. But there is no good recipe yet. I don't think we need something as radical as the New Deal but... who knows.

We can only hope. I think we are headed in the right direction.

As you said, there is no recipe for success yet.

but...

Time in situations like this progresses faster than we want it to.
We need to make decisions now or we will get no where.

I think that depends on the people just as much as the government. If we all contribute than we will overcome our mistakes. We always have. We are America.

 

[aeghrur]

Hm?
I think the 700bil bailout could work if the Gov't went and fixed all the adjustable mortgage rates out there. See, obviously, people don't like giving up their house or that shiny new car. They just need more money to pay since the interest rates out there went up. Now, what the Gov't needs to do is lower it, and people will most likely pay it back.
Also, we shouldn't think anything we do will have an immediate effect. Instead, we should wait, it takes at least a year for some of these things to work, not overnight. I think the 700 bil should do it. =/ Ah, but who knows, it's the future...

 

[Darxmarth23]

Hm?
I think the 700bil bailout could work if the Gov't went and fixed all the adjustable mortgage rates out there. See, obviously, people don't like giving up their house or that shiny new car. They just need more money to pay since the interest rates out there went up. Now, what the Gov't needs to do is lower it, and people will most likely pay it back.
Also, we shouldn't think anything we do will have an immediate effect. Instead, we should wait, it takes at least a year for some of these things to work, not overnight. I think the 700 bil should do it. =/ Ah, but who knows, it's the future...

A lot of the bill was gone to luxury cruises. And yes you are right nothing chances over night. i mean that "short term" would mean either 8 months to about a year.

I think i went pretty deep in my last post. lulz