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DEFLATION may be coming...

Discussion in 'Political Discussion' started by PatriotsReign, Nov 6, 2008.

  1. PatriotsReign

    PatriotsReign Rookie

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    I had a debate with someone (maybe Mossed) on this board about whether Inflation or Deflation may be in store for us. I said then and I still feel that we are headed for deflation.

    This is from the Fortune Magazine site today.

    Deflation: the new threat

    "NEW YORK (Fortune) -- Forget about inflation. The opposite threat - deflation - is what has policymakers sweating now.

    Central banks across Europe slashed interest rates again Thursday. The Bank of England cut its policy rate to 3% from 4.5% - a cut three times as big as the market expected - while the European Central Bank trimmed its own rate by half a point, to 3.25%. The moves come a week after the Federal Reserve cut the Fed funds rate to 1%, touching the lows it set earlier this decade before the housing bubble took shape.

    The cuts are remarkable because it was only four months ago that the ECB was raising interest rates to stem inflation fears tied to the surging prices of energy and food.

    But since then, the deleveraging that has upended the financial sector has accelerated, and economic activity has slowed sharply. Policymakers have changed their tune accordingly, saying falling commodity prices will ease pressures for wage increases and support broad price stability."


    Central bankers fear deflation - Nov. 6, 2008
  2. Lifer

    Lifer Banned

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    great, i'll be able to get a Big Mac for 3 cents...
  3. PatriotsReign

    PatriotsReign Rookie

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    You'll get really fat!
  4. mcgraw_wv

    mcgraw_wv Rookie

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    Is the worst fear of Deflation simply the mass loss of jobs due to loss of demand? Is it possible to defalte while maintaining pay and jobs? If so thats a good thing.

    Could this simply be a correction in price of items and goods back to year 2000 lever before the spike?
  5. PatriotsReign

    PatriotsReign Rookie

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    Considering the last time we experienced significant deflation was during the great depression, in my opinion, it's very bad "if" we get to that point.

    You're right on the money with your assessment as to what would cause deflation. When enough people are unemployed especially on a world-wide level combined with the perception that we better save our money rather than buy that big-screen, then you're right, demand shrinks so far down it drives prices down further & further.

    We should actually be hoping we don't see deflation happen.
    Last edited: Nov 6, 2008
  6. Run DMC

    Run DMC Rookie

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    deflation first, then hyperinflation the likes of which we've never seen. I'm in the process of buying a house with cash, loading up on guns and ammo, and am looking to buy physical gold. I already own a ton of SLV. The times are sure to get very interesting, unfortunately.
  7. PatriotsReign

    PatriotsReign Rookie

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    so we have a gentleman's bet. I say no inflation at all and you say hyper-inflation. How long do you think will take for this to start?
  8. MrBigglesWorth

    MrBigglesWorth Rookie

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    how do i go about buying gold? or are you actually buying real gold and storing it in a safety deposit box or at your home?
  9. Run DMC

    Run DMC Rookie

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  10. MrBigglesWorth

    MrBigglesWorth Rookie

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  11. Run DMC

    Run DMC Rookie

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    18-24 months from now. How much would you like to bet?:D
  12. Michael

    Michael Moderator Staff Member PatsFans.com Supporter

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    #12 Jersey

    Gold is a commodity. I wouldn't recommend buying it right now. Anymore than putting the same money on a roulette wheel.
  13. Run DMC

    Run DMC Rookie

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    so for the record, what are you invested in, oh wise one?
    I would buy american eagles anywhere below $600/ea. You can get them on the net via large dealers or try your local coin shop.
  14. weswelker#83

    weswelker#83 Rookie

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    Deflation for months, maybe a year or two, followed by inflation (high, not hyper) is where I see us headed.
  15. PatriotsReign

    PatriotsReign Rookie

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    I don't buy the Peter Shciff rationale at all. As you know, more and more economists are leaning toward deflation every week. But I'd say that more are still arguing inflation than deflation.

    I'd have to say that hyper-inflation AND deflation are the 2 least supported arguments after ordinary inflation. But we can both post links to the reasons why we believe our favorite theories, but lets' post our own reasons why we support each argument.

    I agree witht the Deflation theory mainly because I believe the economy will contract too fast for the dollar to completely collapse. Everyday I read that this indicator or that one is accelating downward "faster than economists anticipated". So that is my main reason that hyper-inflation can't/won't happen.

    It won't matter that the gov't dumps trillions of printed money onto the economy because people still won't spend it because they have too many bills to catch up on.

    In order for hyper-inflation to actually occur, people would have to start spending money to drive demand higher and higher as the dollar becomes worthless. I just don't see how you think that can happen.
    Last edited: Nov 7, 2008
  16. PatriotsReign

    PatriotsReign Rookie

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    In today's dollars?:D

    I think honor is good enough in this case. One of will be right and we have enough witnesses to declare a champ...we'll just call the loser....a LOSER!;)
  17. PatriotsReign

    PatriotsReign Rookie

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    Last edited: Nov 7, 2008
  18. Run DMC

    Run DMC Rookie

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    Hey, I'm glad to hear you hunkered down for a full 20 minutes and watched those vids! :rolleyes:
  19. PatriotsReign

    PatriotsReign Rookie

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    Don't get me wrong, I watch long video and read long articles, I just don't like watching & reading long ones that people post on this board. I try to always post stuff as brief as possible because I know that just cuz I find something interesting, doesn't mean others will too.

    I like what Schiff says, but he's as arrogant as they come. I've watched him questioned on panels with other economists and he always seems to speak as if none of the others know jack except him.

    Even if there's some truth to that, no one wants to listen to that stuff. Economics is a combination of knowledge & vision but even the best are going to be wrong on 25-50% of their forecasts.
    Last edited: Nov 7, 2008
  20. PressCoverage

    PressCoverage Banned

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    Aren't you the one insisting Peak Oil isn't real? What is driving your doom scenario then?

    I'll agree that buying metals is the way to go right now, however.

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