/biz/ - Business & Finance

>>288370
Inflation cos my money disappears.

Deflation is better cos I just put money in tha bank and it makes more of it.

Cos it's shit.

>>288383
No its not you piker. Are you fucking retarded.

Deflation is worse than inflation. A low inflation rate is desirable for a growing economy.

Hyper-deflation and hyper-inflation are both horrific.

>>288383
>Deflation is worse than inflation. A low inflation rate is desirable for a growing economy.
So cheaper food, construction materials and services are bad? Go figure.

>>288383
Deflation is only worse if you invest in the stock market.

>>288386
>so cheaper stuff is bad?
If it's being caused by deflation it is.

>>288390
What's the difference?

>>288386

Deflation serves as a disincentive to spend money, which will cause a negative demand shock which will lower overall production in the short run, possibly leading to a recession.

Hyper deflation would be better than hyper inflation simply because it would be easier to fix without screwing over a large portion of your population.

>>288386

The problem with deflation is that if you own debt, it remains the same yet you make less in your job.

Considering everyone has or is beholden to debt someway, it is in your best interest to have inflation over time as long as your incomes go up with inflation.

Even if you live debt free and are self employed, the majority of the economy functions based on debt such as corporate bonds, house, car, and student loans so making it economically impossible to pay back loans would mean there would be less people with money to give money to you. Even though prices will get cheaper, there won't be anyone able to afford such things because they are all unemployed or trying to pay back the loans which are at pre-deflation prices.

But as others have said, the nice thing about deflation is that it is easy to resolve by simply making more money.

Hyper inflation is rather difficult to resolve other than jacking interests rates through the roof.

Anyways, what people should strive for is mild inflation so that loans aren't so crippling and incomes rise making people more positive and spend happy to make the economy more robust.

When incomes decrease during deflation there is a psychological aspect to where people spend less thereby causing businesses to lose money and lay off more people who in turn have no less to spend because there incomes went to zero.

Most of the economic crises in history have been deflationary which is why the gold standard was given up on. Any country that deflates their currency would be defeated on the economic warfront these days.

>>288435
>Deflation serves as a disincentive to spend money, which will cause a negative demand shock which will lower overall production in the short run, possibly leading to a recession.
When has this happened historically?

Eh, I don't mind having a lil extra purchasing power.

>>288598

Pretty much every recession after the Civil War one. There has never been a recession in the United States caused by inflation after 1870 except the sort of stagflation experienced in the late 1970's early 1980's. Regan fixed that with jacking up interest prices and ramping up government spending at the same time. Actually it was the Fed chair that did most of the work, but I forget his name.

But other than that all recessions in the United States were depressionary since the 1870's..

The recessions before 1870's don't really have much of a rhyme or reasons other than people were dumb.

Errr... Deflationary not depressionary. I don't think depressionary is even a word.

The 2008 crisis was deflationary for example. The Great Depression was deflationary. All the recession in the 1870 to 1890 were deflationary.

I don't get why people freak out about the depreciation of USD due to inflation. The inflation rates have actually been pretty low for the last 30 years in relation to other countries. Even now USD inflation is well below the average.

>>288638
It's the same reason they flip out when they hear most of our foreign debt is held by China: They're idiots.

>>288598
Most of Japan's "lost decade" was due to deflation and the resultant liquidity trap

>>288638
Dohohoho. Gasoline was about $1.00 in 2000 and is about $3.50 now. That's about 10% compounded annually. Food has also gone up a lot in price in that period. Both eggs and bananas have nearly doubled in price.

>>288669
There are so many other forces a at work on the cost of oil besides just inflation
And most other cost increases can be at least partially attributed to the rising cost of said oil

>>288669
Gas tripling in price has nothing to do with inflation. Gas prices in the US are actually very low in relation to the rest of the world.

>>288676
>>288675
Inflation is the percentage change in prices between two periods. Gas and food count towards that.

>>288680
>thinking pure inflation and the Consumer Price Index are the same thing

>>288680
Yeah but you can't take a few commodities to calculate inflation you have to take all goods as an aggregate. Here is the actual inflation rate in the US since 2000. There are other factors as to why individual prices of goods fluctuate. With foods, especially agriculture, a lot of it has to do with weather, droughts, insects, etc.

>>288680
>cost of college up 900000% over the last decade
>weimar_germany.avi

>>288683
This. Even the Consumer Price Index isn't a fully accurate measure of inflation, it is just one indicator.

You are all VERY good goyim. I'm impressed.

Deflation is falling asset prices and vice versa

Inflation and deflation will eventually cancel each other out, this is an inevitable reality. A small dip in the stock market is called a "correction", because the stock price is going back to its 'real' estimated value.

Now we have decades of inflation which is not caused by increased demand, undersupply but rather the over printing of money that has increased nominal prices all over the board to benefit producers at the expense of consumers.

Now this expansion in money supply will come to and end sooner or later, and will invoke a deflationary crash, and will usher a period where we will see the true price of good/services

>>288714
>Inflation and deflation will eventually cancel each other out, this is an inevitable reality.

>Japan
>2 decades of stagnation and deflation
>m-m-m-muh free murket

In order of bad to worst.

1. Low inflation
2. Low deflation
****POWER GAP****
90000000000000. Hyper deflation
90000000000001. Hyper inflation

>>288714

Um.... I think you are mistaken. If the government keeps printing more money inflation will still keep happening. I mean that is what hyperinflation was all about.

Wiemar Germany's economy didn't go all deflationary when the depression came simply because they kept printing more money.

If you want to argue that we could face hyperinflation if the government prints too much money then I suppose I could agree, but if you want to say that money will be worth more because government kept printing more money then you've got a logic problem.

Seriously... Things that cause inflation do not cause deflation. The market can't simply correct itself by destroying money when the government keeps flooding the market with money. I mean for fucks sake.

Why do people always bring up Wiemar Germany? It was going through a period of political, economical, and social upheaval. What is Argentina's, 1922 Austria, Angola, and Bolivia's excuse?

>>288759

Because it is the most extreme example of hyper inflation in modern history for a western industrialized country (South America and Africa don't count). Austria was bad, but the pictures of people carrying wheelbarrows of money to pay for a load of bread was mostly in Germany.

http://en.wikipedia.org/wiki/Hyperinflation_in_the_Weimar_Republic

Oh that is an interesting read. Weimar got its inflation under control, but caused a deflationary crisis due to an austerity campaign by the government to reign in government debt. This led of course to the election of Nazis in power who reversed the austerity program with the one of the world's largest military buildup programs in history (comparative to nation's GPD).

>>288759
Something rather resonant about the greatest military and economic powerhouse in continental Europe reduced to using their money as wallpaper and/or fuel for burning

>>288773
I recommend "Lords of Finance" for you to read sometime, it was very enlightening as to the state of finance in the inter-war period

>>288408
it also increases the real value of debt

>>288686
During the American Revolutionary War, the American soldiers demanded and got to be paid based upon a basket of commodities such as pork, shoes, tobacco, etc.

The reason the government and the Federal Reserve say that commodities don't count in inflation is because those costs cannot be hidden and very clearly demonstrate the debauching of the currency.

Copper was under $1.00 per pound in 2000. It's approximately $3.00/lb now.

The Federal Reserve loves and creates--via excessive money/credit creation--inflation in financial assets such as stocks, bonds, and housing. Likewise, the Federal Reserve hates the uncorruptible barometers of true inflation: crude oil, food, gold, and commodities in general.

>>289331
So is tracing the buying price of a raw material a good way of measuring inflation/deflation over a given period of time?

>>289331
>commodity prices
>incorruptible
Except commodity prices are manipulated all the time.

I think it's a good thing to be incentivized to save the majority of the money you make. Investment should not be a replacement for a savings account. If everyone hoarded cash, we'd recover more quickly from shit like natural disasters destroying your home, and no one would have to go into debt. There's no such thing as a rainy day fund that's too large. Debt is evil and should be avoided at all costs. All it does is kick the can down the road. I only make purchases that are absolutely necessary because I believe in quality over quantity. Growth for the sake of growth is the ideology of the cancer cell.

>>288370
They both have positives and negatives, neither is better than the other.

>Deflation is better for your purchasing power (for imports at least), and better for import based economies and businesses

>Inflation is an equalizer for domestic purchasing power and grants increased market value for exports.

Hyper inflation and hyper deflation are bad for everyone, unless you are a socially-shunned hermit who lives off the grid, hunts in the wild and retires to your cave filled with $1000 dollar FIAT notes to order shit off Ebay.

>>289429

It is a reasonable way of making the measuring inflation/deflation more accurate. The talk that food and fuel prices are volatile and are thus excluded from the CPI is balderdash. If volatility were such a big deal, the people who manage the CPI could include moving averages of food and fuel prices in the CPI calculation.

I suspect that only using commodities to measure inflation/deflation is going to be as flawed as totally excluding them from the CPI. For example, I suspect that iron ore is overpriced right now due to stupid China churning out more steel than everyone on this planet can use. Likewise, crop failures or bumper crops can greatly affect the price of foods. This is likely where using moving averages will help a lot in smoothing out the volatility.

In a sense, measuring inflation is likely portfolio management: diversify to reduce volatility.

But the idea of removing the cost of fuel and food from inflation is poppycock and the people charged with tracking the CPI know it. Hedonic adjustments, anyone?

>>289436
Moving averages will smooth out the manipulations of price.

>>289331
>>289739
My whole point is that you can't take the price of oil and say "see inflation is out of control because gas costs 3 times as much!". There are other factors that weigh in on oil prices, not just inflation. I don't think oil or food prices should be excluded from the Consumer Price Index, but I don't think inflation rates should be wholly based on them either. With that being said if you added in the commodities that were "removed because of volatility" the inflation rate would only be effected by less than half a percent on average. For the last 30-40 years inflation has been kept under check for the most part in the US, and inflation rates are relatively low right now. In relation to other countries we are under the median and have been for a while. Hedonic adjustment is used by 5 of the G-7 nations including the European Union.

>>289656

>Debt is evil and should be avoided at all costs.

That is a naive view considering the majority of modern day economics revolves around. I would agree that usury is forbidden by the Bible and that the Christian church suppressed usury for over a 1,000 years.

However, it turned out that economies could grow faster and more efficiently with debt so eventually when the Protestants came into power in the 1500's they said to hell with the Bible and let everyone do loans (not just the Jewish people who were the only people who did loans in the middle ages). Even the Catholic church gave in and loans and debt occurred.

Anyways, a business who takes loans, sells bonds and sells stocks will grow faster and make much more income than a business that just uses it profits to expand.

There is no denying this fact. The same could be said about individuals who take loans and use it wisely.

So you can't pit pat and boo hoo about debt all you want, but if the Bible can't convince western civilization that its bad, then I doubt a poster on 4chan is going to do any better.

So with debt being such a big factor in modern economics, inflation is the best course.

Otherwise you fuck over the vast majority of people and businesses who can't afford to pay loans and bonds when the economy deflates.

>>290132
>Happy merchant - the post.


I want asset prices to fall, especially house prices. Fuck all those people who took out loans. I want to be able to save up and buy a house without going through a fucking bank and getting in debt to do it.

And house prices should be a quarter of what they are right now.

I'd rather an increase in liquidity and the money supply. With a moderate increase in asset prices.

>>290191

And I want the Federal Reserve to send me million dollar checks too.

But its not going to happen.

You can argue all you want that we should do away with debt, but the past 500 years of economics says no.