Deflation Coming?

[william the wie]

A lot of columns and threads about this "threat" in regards to the US stock market exist including posts on this board so I thought I would create a thread on the subject.

My take:
Given that the US is the best of the worst we experience net capital flight arrivals and money coming in is the main driver of capital markets. Therefore I don't see this as a big threat to the US market. But the contention that this is bad news for many consumers and momentum investors is probably correct .

If you contact the financial ads at the bottom of the page and use gimmick investing techniques you better be wearing a scuba suit because the sewerage out-flow is dead ahead.

As to me I prefer REITs, utilities and transport companies with options so I get paid to sell in May but instead of walking away I prefer to be paid to get back in in November. That combined with index hedges in case my 98.6% protection ain't good enough.makes me happy.

So, what do you think of deflation?

 

[DarkFury]

I think deflation is market correction that comes after government meddles to much in the economy.

 

[B. Kidd]

Yup........there's a wide gap between what people want and can actually get.

 

[bugs]

the REAL Economy Sucks.. and HAS Sucked for a LONG Time now.. Michigan has seen NO RECOVERY (at all) Unless you count Health care and Government Type "Jobs"

Now even the FAKE stock market is going down (again)

Gold and Silver prices are suppressed...

 

[Mac1958]

Unfortunately, there are some indications of deflation both here and abroad.

That would be really, really bad news.

Chances are less than 50/50 of that happening, but this economy really needs a spark.
.

 

[Avorysuds]

I think the US will spend a number of years in a permanent recession. The FR will keep interest rates low and in one way or another keep bailing Presidents and congressmen out. With who the Reps and Dems offer for President there will be no change and if anything far more spending. This spending of fake jobs will add to the debt that already it's quite apparent we can't get out from under.

The markets crash slightly every month or 2, this will keep happening but until bailouts end and interest rates actually go up so the FR can pay shit off we will keep getting McJobs and sugar food for all the peasants in this country.

 

[william the wie]

Unfortunately, there are some indications of deflation both here and abroad.

That would be really, really bad news.

Chances are less than 50/50 of that happening, but this economy really needs a spark.
.

OH the horror! Thrift and industry will be rewarded whilst gambling and living beyond one's means will be punished. SAY IT AIN'T SO JOE!.

 

[Mac1958]

Unfortunately, there are some indications of deflation both here and abroad.

That would be really, really bad news.

Chances are less than 50/50 of that happening, but this economy really needs a spark.
.

OH the horror! Thrift and industry will be rewarded whilst gambling and living beyond one's means will be punished. SAY IT AIN'T SO JOE!.

Deflation can be more destructive to the macro economy than inflation.
.

 

[william the wie]

Unfortunately, there are some indications of deflation both here and abroad.

That would be really, really bad news.

Chances are less than 50/50 of that happening, but this economy really needs a spark.
.

OH the horror! Thrift and industry will be rewarded whilst gambling and living beyond one's means will be punished. SAY IT AIN'T SO JOE!.

Deflation can be more destructive to the macro economy than inflation.
.

That is a claim without proof. nations have been destroyed in part or in whole by inflation or more commonly have very bloody civil wars as with the UK and France after the South Sea bubble/Mississippi Scheme. Can you cite some deflationary examples with higher casualties than WWII, the revolutionary/Napoleonic and the numerous other deaths caused by inflationary economic collapse?

 

[Mac1958]

Unfortunately, there are some indications of deflation both here and abroad.

That would be really, really bad news.

Chances are less than 50/50 of that happening, but this economy really needs a spark.
.

OH the horror! Thrift and industry will be rewarded whilst gambling and living beyond one's means will be punished. SAY IT AIN'T SO JOE!.

Deflation can be more destructive to the macro economy than inflation.
.

That is a claim without proof. nations have been destroyed in part or in whole by inflation or more commonly have very bloody civil wars as with the UK and France after the South Sea bubble/Mississippi Scheme. Can you cite some deflationary examples with higher casualties than WWII, the revolutionary/Napoleonic and the numerous other deaths caused by inflationary economic collapse?

Sure, the Great Depression and Japan's Lost Decade of the 90's, from which they have never really recovered.

And in our modern, symbiotic, highly complicated global economy, having deflation hit Europe and America at the same time that China is heading in the same direction and the American stock market is still overbought could compress both corporate profits and wages significantly. There is no way to know what global deflation could to in this modern economy, which is why I used the words "can be".

The global economies you cite were primitive compared to what we're dealing with now, damage still remains from 2008/2009, and so do dangers that have not been addressed.

The Fed can spike interest rates to tamp down inflation. It would have to go below zero to deal with deflation.
.

 

[william the wie]

yeah, the bodycount was massive. Japan had how many more deaths as a result of the lost decades as opposed to the Chinese and Japanese inflation that took the Yen from $0.52 in 1931 to $0.1671 by Pearl Harbor. I stand corrected you are right getting nuked and napalmed is so much more preferable to low economic growth.