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Question: If the price of everything comes down, is that good for the economy?

Discussion in 'Political Discussion' started by PatriotsReign, Nov 18, 2008.

  1. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    In today's news;

    Wholesale prices in record plunge

    "NEW YORK (CNNMoney.com) -- Wholesale prices fell by a record amount in October as energy costs continued to decline, government figures showed Tuesday.

    The Labor Department's Producer Price Index (PPI) decreased 2.8% in October, after easing 0.4% in September. It was the sharpest one-month decline on record and much more than the 1.8% decline that economists surveyed by Briefing.com had expected."


    Wholesale prices in sharp decline in October - Nov. 18, 2008


    It is so easy for us to look at everything through our own eyes and say "Of course this is good!"...but the fact is, it's not good for the economy ESPECIALLY if it continues.

    As the price of everything comes down, so do earnings and profits. With reduced earnings and profits come layoffs and crashing stock market and most of all, as the price of everything comes down, so too does the GDP.

    As you all know, this is the potential deflation scenario we are facing. If it happens, it's not good. If you need proof just consider that the last time it happened in the US we were in the middle of a DEPRESSION.
     
    Last edited: Nov 18, 2008
  2. Run DMC

    Run DMC In the Starting Line-Up

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    #24 Jersey

    answer: It's good for my economy! :D
     
  3. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    wassup Mossed? you wise arse!;)
     
  4. Run DMC

    Run DMC In the Starting Line-Up

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    #24 Jersey

    yo Bro-ham, keeping the fascists in line, are we?:singing:
     
  5. Born_a_Patriot

    Born_a_Patriot PatsFans.com Supporter PatsFans.com Supporter

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    If the price of oil keeps going down it could work in favor of OPEC. Americans will not see the need to develop energy alternatives and thus keep them in control of our future. The American people need to realize we are transferring our wealth to our enemies. You have China/Wal-Mart on one side and the OPEC Nations including Russia on the other.
     
    Last edited: Nov 18, 2008
  6. PatriotsReign

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    #18 Jersey

    Keep our fingers crossed....I think Obama and his advisors see the importance or re-building our infrastructure. You're right, we have to stop dollars from pouring out of this country and the only way to do that is to become a nation of producers once again.

    With our technological advantages, we have the tools. We just need a leadership that stays focused on the target and never, ever loses sight of it.

    Just think about all the technology we have from our weapons manufacturers and space exploration sciences. It boggles my mind that this stuff hasn't leaked over to the private sector more than it has.
     
  7. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    I can't even keep myself in line Mossed.:(
     
  8. Born_a_Patriot

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    It was announce last night that China has hundreds of front companies in the U.S. to steal Aerospace Technology.
    Former Boeing engineer accused of stealing trade secrets from NASA -- OrlandoSentinel.com
     
    Last edited: Nov 18, 2008
  9. sdaniels7114

    sdaniels7114 Experienced Starter w/First Big Contract

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    That's ok, they mostly transfer it all back anyway. Saudi Arabia has three things, oil, sand and really angry people. They have to buy almost everything else from some other country.

    There's something to be said about just screaming through every drop of oil on the planet until its all gone. When that happens two things will result. 1)America will move on, and 2) the oil producing countries of the world will go back to using sand for toilet paper.
     
  10. Born_a_Patriot

    Born_a_Patriot PatsFans.com Supporter PatsFans.com Supporter

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    I think you are severely underestimating them. And their motivations
     
  11. Real World

    Real World Moderator Staff Member

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    We should be drilling our own, while moving to something different. Instead we ignore our own, send our money, and arsehole overseas.

    Yes, if prices come down, it's good for the economy. Cheaper products, commodities, and cost of doing business are required in order for economic conditions to improve.
     
  12. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    Fair enough and it makes sense to an extent. Consumers saving money is awesome...at least for us. But it's not good for the economy if people aren't spending that money.

    But I'll be very clear...I AGREE, it is very good for people as individuals.

    But when you lower the cost of everything, that means people need to spend less. And if they spend less, the GDP contracts and earnings and profits decline and companies lay off more people. And that is recession in a nutshell.

    It's a classic catch-22.

    Think about this...homes and automobile prices are the lowest we've seen in years...yet no one's buying either one
     
    Last edited: Nov 19, 2008
  13. Real World

    Real World Moderator Staff Member

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    It's not just people PR. Every business in the land is saving money. I have 4 trucks that gas up on an ExxonMobil account, and that bill was murder a few months ago, and it's managable now. I only got 4 trucks. Imagine what the monetary difference is for UPS, FedEX, cabbies, truckers, etc. and this is only with the cost of fuel. It's a big difference.
     
  14. PatriotsReign

    PatriotsReign Hall of Fame Poster

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    #18 Jersey

    Your right as far as YOUR business goes and for other business's expenses. But on the flip side, what are you able to do for your business with that savings? Are you re-investing and hiring new employees or building more homes?

    What about the businesses where you are spending those fewer dollars? The guy who owns the gas station is collecting less revenue.

    I understand your logic clearly, but do you understand that if we all pay less for everything, it shrinks our GDP & reduces corp. revenue and profit? And if people are not spending their savings that only increases the harm that lower prices are inflicting upon the economy?

    I know you understand what happened in the great depression RW....and that was the last time we experienced significant and prolonged deflation.

    Also, UPS, FEdex and cabbies are all experiencing sharp declines in business, so what good is it really doing for them? As a businessman, you know total revenue is what counts. The company I work for is actually RAISING the wholesale price of all our products in December to help drive our revenue in 2009. Imagine if we lowered our prices.
     
    Last edited: Nov 19, 2008

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