Well that's no good.

Why so tense?

Wait, you mean to tell me that prices are declining from the highs generated during an artificially created speculative bubble?

Shocking. I implore you all to initiate irrational activity based on the belief of your imminent demise.

English, much?

All your Euros are belong to us.

unyon: I implore you all to initiate irrational activity based on the belief of your imminent demise.

Done and done!

Or it may be that printing up several trillion US dollars may have affected the Euro a wee bit. I've got some Euros stuffed in my metaphorical mattress for a rainy day.

Marcus Aurelius: Or it may be that printing up several trillion US dollars may have affected the Euro a wee bit. I've got some Euros stuffed in my metaphorical mattress for a rainy day.

Haha, you're saving a currency that is going to be dead within 10 years. The dollar may die, but it won't before the Euro does.

So this *is* the Final Countdown after all.

Experience deflation?
I bet all those WoW players in Europe are pissed.

Related to the collapse in dividend from the gerundive market, dangerous agenda if you ask me.

Look cons you can go move away to Europe, the socialist place is now Ron Paul wonderland

I blame socialism.

Quick.... hurry up and adopt all of their policies.

Jean-Claude Trichet is the most important central banker in the world

Oooooohhhh. Look at me. I'm Jean-Claude Trichet. I'm the most important central banker in the world. All those peons from the left banks and right banks can lick my golden emblazoned taint, because I rock the central bank like Sinatra rocked crotches. I'm a foppish dandy who wears a funny little hat when I go to the market. I'm the mayor of Bankerton, capital of Bankstralia. I piss diamonds and shiat emeralds. People in Uganda bottle my farts and use it as currency. I'm so f*cking rich my name has two first names, a hyphen and a superflous "t." I'm soooooo special. My name is Jean-Claude Trichet. SUUUUCCCKKK MY DIIIIICKKKK.

/at least that's what I would say if I was Jean-Claude Trichet.

You see when oil producers collude to create the highest profits ever generated prices tend to increase. Then prices come back down. It's not really deflation. It's discontinued transfer of wealth.

GAT_00: Marcus Aurelius: Or it may be that printing up several trillion US dollars may have affected the Euro a wee bit. I've got some Euros stuffed in my metaphorical mattress for a rainy day.

Haha, you're saving a currency that is going to be dead within 10 years. The dollar may die, but it won't before the Euro does.

And you base this outrageous statement on what?

Good.

Lost Thought 00: Good.

What do you mean good. Remember what happened last time Europe was in an economic crisis?

Doctor Funkenstein: Jean-Claude Trichet is the most important central banker in the world

Oooooohhhh. Look at me. I'm Jean-Claude Trichet. I'm the most important central banker in the world. All those peons from the left banks and right banks can lick my golden emblazoned taint, because I rock the central bank like Sinatra rocked crotches. I'm a foppish dandy who wears a funny little hat when I go to the market. I'm the mayor of Bankerton, capital of Bankstralia. I piss diamonds and shiat emeralds. People in Uganda bottle my farts and use it as currency. I'm so f*cking rich my name has two first names, a hyphen and a superflous "t." I'm soooooo special. My name is Jean-Claude Trichet. SUUUUCCCKKK MY DIIIIICKKKK.

/at least that's what I would say if I was Jean-Claude Trichet.

Oh thanks. Now I must use the little lord fauntleroy's room

12349876: Lost Thought 00: Good.

What do you mean good. Remember what happened last time Europe was in an economic crisis?

Delicious pies!

...that's what the ovens were for, right?

Their prices on goods are really high. An Italian girl that I was working with said that it is cheaper for her to fly to the US to buy some high priced electronics than to buy them in Italy.

/anecdotal evidence is a kind of evidence

12349876: What do you mean good. Remember what happened last time Europe was in an economic crisis?

They elected Margaret Thatcher?

You're right. We can't allow something that terrible to happen. NEVER AGAIN!

Jean-Claude Trichet is an awesome name. Especially the last name. Trichet. . . That's just awesome.

Can someone translate subby's headline into English, please?

At least it will stop the hyperinflation histrionics for a while

satanorsanta: Their prices on goods are really high. An Italian girl that I was working with said that it is cheaper for her to fly to the US to buy some high priced electronics than to buy them in Italy.

/anecdotal evidence is a kind of evidence

This is believable as unlikely as it may be. For a long time, Brits would fly to NYC or NJ on cheap fares to buy clothes and other things on the cheap thanks to the favorable exchange rate.

Doctor Funkenstein: Jean-Claude Trichet is the most important central banker in the world

Oooooohhhh. Look at me. I'm Jean-Claude Trichet. I'm the most important central banker in the world. All those peons from the left banks and right banks can lick my golden emblazoned taint, because I rock the central bank like Sinatra rocked crotches. I'm a foppish dandy who wears a funny little hat when I go to the market. I'm the mayor of Bankerton, capital of Bankstralia. I piss diamonds and shiat emeralds. People in Uganda bottle my farts and use it as currency. I'm so f*cking rich my name has two first names, a hyphen and a superflous "t." I'm soooooo special. My name is Jean-Claude Trichet. SUUUUCCCKKK MY DIIIIICKKKK.

/at least that's what I would say if I was Jean-Claude Trichet.

DNRTFA, but after reading that, there appears to be no need. LOLz abound.

// I experience happy

*bzzzt* HQ do you copy? We need a whole riot squad of Grammar-Nazis in this thread, NOW! *bzzzt*

relaxitsjustme: At least it will stop the hyperinflation histrionics for a while

No, no it won't.

I show them all the time how we had worse inflation during the gold standard and they still don't accept it.

This is why I thought that a European currency was a stupid idea. In the old days, each country had their own currency, so if one country fell, it would really only directly affect that country, and other more stable countries could step in and offer assistance to minimize the damage. Now, with the Euro, if Germany's economy tanks and the Euro falls, it affects 16 other countries simultaneously. France can't easily step in to help Germany if their economy is in trouble too thanks to the Euro's collapse.

Granted, the domino effect still existed under the old system, but it is much easier to stop 16 smaller dominoes than one large domino.

/Besides, I like collecting foreign coins
//Not an economist

redundant headline is redundant

Texas with a Dollarsign: This is why I thought that a European currency was a stupid idea. In the old days, each country had their own currency, so if one country fell, it would really only directly affect that country, and other more stable countries could step in and offer assistance to minimize the damage. Now, with the Euro, if Germany's economy tanks and the Euro falls, it affects 16 other countries simultaneously. France can't easily step in to help Germany if their economy is in trouble too thanks to the Euro's collapse.

Granted, the domino effect still existed under the old system, but it is much easier to stop 16 smaller dominoes than one large domino.

/Besides, I like collecting foreign coins
//Not an economist

It's almost like when the US moved away from having each state having a separate currency. Seems it worked for us in the long run.

You can't have commerce easily from state to state if the currency is different. That is the problem the US had and the problem the EU had.

12349876: Lost Thought 00: Good.

What do you mean good. Remember what happened last time Europe was in an economic crisis?

I rememember Germans vacationing in Paris, summercamps for the Polish jews and lots of news footage of Charlie Chaplin in a uniform.

Texas with a Dollarsign: [T]he domino effect still existed under the old system, but it is much easier to stop 16 smaller dominoes than one large domino.

The idea is that by having 16 countries using the same currency, you're attaching a support structure to the one and only domino. Because Italy might have a down year, while France sees GDP growth. The only thing that could hurt the Euro is systemic decline, perhaps brought on by a bubble econom-

Wait. Drat.

Texas with a Dollarsign: This is why I thought that a European currency was a stupid idea. In the old days, each country had their own currency, so if one country fell, it would really only directly affect that country, and other more stable countries could step in and offer assistance to minimize the damage. Now, with the Euro, if Germany's economy tanks and the Euro falls, it affects 16 other countries simultaneously. France can't easily step in to help Germany if their economy is in trouble too thanks to the Euro's collapse.

Granted, the domino effect still existed under the old system, but it is much easier to stop 16 smaller dominoes than one large domino.

/Besides, I like collecting foreign coins
//Not an economist

How do you explain this then: if the US economy tanks it affects a whole lot of countries independent from their currency.

Won't be long now.

Inescapable Future of Humanity: 12349876: What do you mean good. Remember what happened last time Europe was in an economic crisis?

They elected Margaret Thatcher?

You're right. We can't allow something that terrible to happen. NEVER AGAIN!

Came here for this.

But I am le tired.

clusterfrak: 12349876: Lost Thought 00: Good.

What do you mean good. Remember what happened last time Europe was in an economic crisis?

I rememember Germans vacationing in Paris, summercamps for the Polish jews and lots of news footage of Charlie Chaplin in a uniform.

Those were good times.

This thread are experience Engrish.

GaryPDX: Won't be long now.

You've made so many predictions, Gary, and none of them came true. None. Not a single one.

How come you're not embarrassed to continue on that path, Gary? I'm really curious. What is the source of your self-confidence in matters of politics?

GaryPDX 2009-06-30 05:27:33 PM
"Won't be long now."

Don't you get tired of being wrong all the time?

I was in Paris for my honeymoon a week ago and noticed deep sales going on everywhere. Clothing was especially hard hit with markdowns like 40 or 50% off. London uses the pound but they were going on and on about unemployment on the news. I think England is heading in the deflationary route as well.

Hetfield: GaryPDX: Won't be long now.

You've made so many predictions, Gary, and none of them came true. None. Not a single one.

How come you're not embarrassed to continue on that path, Gary? I'm really curious. What is the source of your self-confidence in matters of politics?

Some people just enjoy making others upset. We call them sociopaths. Or trolls, whatever.

BergZ: GaryPDX 2009-06-30 05:27:33 PM
"Won't be long now."

Don't you get tired of being wrong all the time?

Hetfield: GaryPDX: Won't be long now.

You've made so many predictions, Gary, and none of them came true. None. Not a single one.

How come you're not embarrassed to continue on that path, Gary? I'm really curious. What is the source of your self-confidence in matters of politics?

whoa..two personal attacks in a row...lol. Fishing is good.

If Europe deflates, that's going to make skiing in the Alps kind of problematic. Guess it's Nordic skiing for all!

GaryPDX: Won't be long now.

make that 3

Hetfield: GaryPDX: Won't be long now.

You've made so many predictions, Gary, and none of them came true. None. Not a single one.

How come you're not embarrassed to continue on that path, Gary? I'm really curious. What is the source of your self-confidence in matters of politics?

I think "Won't be long now" was in reference to the quickness with which a farker would take his trollbait.

Corvus: It's almost like when the US moved away from having each state having a separate currency. Seems it worked for us in the long run.

You can't have commerce easily from state to state if the currency is different. That is the problem the US had and the problem the EU had.

Did each state have its own stock exchange too?

The United States' states exist in an odd hybrid, half-sovereign and half-dependent. However sovereign the states are, since the U.S. is one country, it makes sense to have a common currency within its borders. Maybe it didn't back around the Revolution, but it does now.

A better analogy would probably be the North American Union the right-wingers often dredge up whenever the talking points aren't e-mailed out in time for Limbaugh. Or if every province in France had its own currency.

Besides, in the Internet age, do we really need to worry a whole lot on the inability to move money from one currency to another?

You make valid points, I'm just trying to offer my opinion. Of course, this is Fark, so I should just get over it.

So the Irish people I know won't be flying to New York to shop anymore because "it's so cheap"?

GaryPDX: whoa..two personal attacks in a row...lol. Fishing is good.

Right. "Snark". I forgot.

ghare: Some people just enjoy making others upset.

I told you guys the liberals would crash the planet. I'm not happy about it. But ohhh nooo..many of you called me ..insane..yea that's it.

ParallelUniverseParking: How do you explain this then: if the US economy tanks it affects a whole lot of countries independent from their currency.

I never denied that the US is a large domino, for better and for worse. It's bad enough with one, I feel. Why add another right now?

GaryPDX: would

Really, Gary? Just the liberals? The conservatives were blameless?

Hetfield 2009-06-30 05:35:20 PM
GaryPDX: Won't be long now.

"You've made so many predictions, Gary, and none of them came true. None. Not a single one.
How come you're not embarrassed to continue on that path, Gary? I'm really curious. What is the source of your self-confidence in matters of politics?"

You beat me by 11 seconds.

At any rate, I think I have an answer for your question: Cornell University's psychology department did a study a while ago entitled "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments (new window)" which I think answers your question WRT Gary's near limitless hubris.

GaryPDX: ghare: Some people just enjoy making others upset.

I told you guys the liberals would crash the planet. I'm not happy about it. But ohhh nooo..many of you called me ..insane..yea that's it.

Too bad that there are not really many liberals in charge in Europe right now.

YixilTesiphon: GaryPDX: would

Really, Gary? Just the liberals? The conservatives were blameless?

nah the conservatives were just trolling for LULZ...
the libtards took the bait..


//hot

Europe needs a new Obama Hitler.

Perhaps they should have spend more on stimulus like the good ol' US of A, no?

Funk Brothers: Europe needs a new Obama Hitler.

nah the jews are in Middle east now..
and we already had a new hitler.. his name was Osama err.. Saddam ahh... Ahmadinejad

BergZ: At any rate, I think I have an answer for your question: Cornell University's psychology department did a study a while ago entitled "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments (new window)" which I think answers your question WRT Gary's near limitless hubris.

Someone posted a photo of him awhile ago. I don't want to sound superficial, but that answered quite a few questions. What I don't understand, and probably never will, is why so many working class people are such hardcore Republicans.

Hetfield: BergZ: At any rate, I think I have an answer for your question: Cornell University's psychology department did a study a while ago entitled "Unskilled and Unaware of It: How Difficulties in Recognizing One's Own Incompetence Lead to Inflated Self-Assessments (new window)" which I think answers your question WRT Gary's near limitless hubris.

Someone posted a photo of him awhile ago. I don't want to sound superficial, but that answered quite a few questions. What I don't understand, and probably never will, is why so many working class people are such hardcore Republicans.

Bullshiat! Link! Link!

bartink: Perhaps they should have spend more on stimulus like the good ol' US of A, no?

I'll take inflation over deflation every day of the week.

GaryPDX: ghare: Some people just enjoy making others upset.

I told you guys the liberals would crash the planet. I'm not happy about it. But ohhh nooo..many of you called me ..insane..yea that's it.

Because, of course, if the economy tanks, it's always attributable to ONE SINGLE CAUSE, right, Gary? Just like war, peace, invention, and discovery. Yep, just ONE SINGLE CAUSE led to some of the most amazing events in world history.

You need to get out more.

adamgreeney: Bullshiat! Link! Link!

I didn't save it.

Hetfield: What I don't understand, and probably never will, is why so many working class people are such hardcore Republicans.

In their fantasy, they are one day going to be stinkng rich, because they are honest (they are not), they work hard (at unrewarding dead end jobs) and know that they too will achieve the American dream (not available in Appalachia). In this fantasy, the government ruins it all by taxing away their fortunes and giving it to gay atheist activist vegetarian judges driving hybrid cars that make laws that take away their freedom and liberty.

I'm glad that I could clear that up for you.

I was in the pool!

Technoblake: Hetfield: What I don't understand, and probably never will, is why so many working class people are such hardcore Republicans.

In their fantasy, they are one day going to be stinkng rich, because they are honest (they are not), they work hard (at unrewarding dead end jobs) and know that they too will achieve the American dream (not available in Appalachia). In this fantasy, the government ruins it all by taxing away their fortunes and giving it to gay atheist activist vegetarian judges driving hybrid cars that make laws that take away their freedom and liberty.

I'm glad that I could clear that up for you.

Wow, genius capsule of working class Republicana. I'm going to save that, if that's okay by you. Except, you need to put "liberal" in by government; and add that when a Republican is president, he can never make the fantasy come true because of sekrit libruls in Congress.

Hetfield: GaryPDX: Won't be long now.

You've made so many predictions, Gary, and none of them came true. None. Not a single one.

Would someone please show Gary his "statisicals" again? Or else kick him in the,

Them. Kick him in THEM!

(damn comma key!)

Technoblake

It's easier than that. You have to convince the middle class that it is the upper class, the lower class that it is the middle class, and that each needs to be protected from the others.

Doctor Funkenstein: All those peons from the left banks and right banks can lick my golden emblazoned taint, because I rock the central bank like Sinatra rocked crotches.

Also,

Doctor Funkenstein: I'm a foppish dandy who wears a funny little hat when I go to the market.


Thanks.

Technoblake: In their fantasy, they are one day going to be stinkng rich, because they are honest (they are not), they work hard (at unrewarding dead end jobs) and know that they too will achieve the American dream (not available in Appalachia). In this fantasy, the government ruins it all by taxing away their fortunes and giving it to gay atheist activist vegetarian judges driving hybrid cars that make laws that take away their freedom and liberty.

I suspect it rather has something to do with their love for authority and affinity to submission, which is also why the GOP is the preferred party for fundamentalists.

Inflation is bad, and now deflation is bad too?

Geez.. what's good?

Baby Diego: It's easier than that. You have to convince the middle class that it is the upper class, the lower class that it is the middle class, and that each needs to be protected from the others.

You can also add illegal immigrants to the list of faux villains...but I didn't want to start a flame war.

If it helps at all, I'm not sure why working class folks follow the Dems either.

Technoblake: If it helps at all, I'm not sure why working class folks follow the Dems either.

Cause when one of your parents beats you and the other rapes you, you want to live with the one that beats you.

Damn GaryGaryPDX: whoa..two personal attacks in a row...lol. Fishing is good.

Damn Gary, reeling 'em in

Angry Drunk Bureaucrat: So this *is* the Final Countdown after all.fark this, i'm heading to venus

Resin33: Inflation is bad, and now deflation is bad too?

Geez.. what's good?

This was my thought, too. Apparently "flation" is what we need, but no one knows how to achieve flation.

Dwight_Yeast: Cause when one of your parents beats you and the other rapes you, you want to live with the one that beats you.

Yeah. I guess that would be the case.

GaryPDX: ghare: Some people just enjoy making others upset.

I told you guys the liberals would crash the planet. I'm not happy about it. But ohhh nooo..many of you called me ..insane..yea that's it.

Dwight_Yeast: Cause when one of your parents beats you and the other rapes you, you want to live with the one that beats you.

You only said "Rape" once.

Deflatiion may very well reduce the "worth" of a single unit of currency, but assuming prices follow suit, it actually increases your purchasing power. It can actually be a good thing, raising the value of a nations currency in comparison to others.

Take for example the United States Dollar. It has inflated over time, at a faster rate than other nations, and now is more worthless in comparison because there is more of it available.

Certainly there are more complicated factors involved, but this is a very simplistic look at the system.

thirdspade: Deflatiion may very well reduce the "worth" of a single unit of currency, but assuming prices follow suit, it actually increases your purchasing power. It can actually be a good thing, raising the value of a nations currency in comparison to others.

Take for example the United States Dollar. It has inflated over time, at a faster rate than other nations, and now is more worthless in comparison because there is more of it available.

Certainly there are more complicated factors involved, but this is a very simplistic look at the system.

Really? You sure the dollar is losing power to other currencies lately?

Resin33: Inflation is bad, and now deflation is bad too?

Geez.. what's good?

Think of it as a nuclear reaction. You want it to be at a stable balance. If it begins to grow you have a nuclear meltdown and disaster. If it slows it stops altogether and you have critical failure. You want the currency to hold a relative stability with it's purchasing power. Keynesians seem to try and game the system with inflation though. Non-Keynesians tend to think this is dangerously foolish.

relaxitsjustme: At least it will stop the hyperinflation histrionics for a while

Europe and America may have an affect on each other, they're not the same country nor do they share the same currency.

bartink:
Really? You sure the dollar is losing power to other currencies lately?

Pretty sure, yeah. I don't follow the exchange rates between countries, but pre-economic collapse, the Euro and Pound were surpassing the dollar significantly because the dollar was inflating at a higher rate.

That is all.

thirdspade: Pretty sure, yeah. I don't follow the exchange rates between countries, but pre-economic collapse, the Euro and Pound were surpassing the dollar significantly because the dollar was inflating at a higher rate.

And the dollar came roaring back once the collapse began.

I don't think you will find any, certainly not many, economists who would prefer deflation.

bartink: I don't think you will find any, certainly not many, economists who would prefer deflation.

Which is why I was cracking jokes about Ron Paul and the gold standard. Why would you ever think it's a good idea to stagnate the money supply when you have a growing population?

Subby is experience fail.

Where you at Merkle? Lead your damn continent.

bartink:
And the dollar came roaring back once the collapse began.

I don't think you will find any, certainly not many, economists who would prefer deflation.

I don't think you will find any, certainly not many, economists who even have any farking clue how the economy works. In light of our current predicament, I'd say a degree in economics is about as useful as a degree in philosophy. Which is to say, not very.

B-b-but hyper-inflation! Spending bad!

The article said some nations will NEVER recover???

Geez, both Japan and Germany were bombed the hell out of,
taken over, etc....look where they are now.

With some effort, intelligence and innovation,
any nation will recover from fiascos with some time.

We're not talking about invasions or disappearing countries,
its a bit of economic tripping, not a death-knell.

Stop panicking, start working.
You'd be amazed how much you can do when you get off your arse.

2wolves: Why so tense?

You lost me...

Europe is experience deflation

That's probably because THESE guys are stealing their thunder. (pops)



Angry Drunk Bureaucrat: So this *is* the Final Countdown after all.

I guess there IS no one to blame.

I'm getting tired of this. Deflation is bad, inflation is bad, too (you should have heard them cry when the inflation in the eurozone was quite high some time ago)... these economy guys can't do anything but biatch and complain to conceal the fact that it isn't because of the currency but because of the bad decisions of their colleagues why the shiat hit the fan.

FTFA: In particular, the devastated economies of Spain and Ireland are never going to recover with this sort of thing going on.

This would have been a very apt place for the writer to note that the economies of both Spain and Ireland recently experienced a speculative housing bubble, which undoubtedly contributed to their problems significantly.

It really does not seem to be difficult to get a job writing op-ed pieces. It's like, you don't even have to really know what you're talking about, as long as you deliver some kinda copy by deadline.

The reason why deflation is worse than inflation can be summed up as so: "Why buy today when my money is worth more tomorrow?"

And for people who will say "Why is that a bad thing again?": when you have whole countries thinking this, it kills an economy.

Extreme parity we Eurodollar also?

I wanna go to Amsterdam in October, so hopefully I wont get raped on the exchange rate like last time I went to Europe!

did Borat write this headline?

NEDM: The reason why deflation is worse than inflation can be summed up as so: "Why buy today when my money is worth more tomorrow?"

And for people who will say "Why is that a bad thing again?": when you have whole countries thinking this, it kills an economy.

Don't worry, your beloved inflation will still hit America hard.

GaryPDX: ghare: Some people just enjoy making others upset.

I told you guys the liberals would crash the planet. I'm not happy about it. But ohhh nooo..many of you called me ..insane..yea that's it.

The problem is the European Banks followed the Republican Plan. Thus the US is better off than them right now.

Komplex: GaryPDX: ghare: Some people just enjoy making others upset.

I told you guys the liberals would crash the planet. I'm not happy about it. But ohhh nooo..many of you called me ..insane..yea that's it.

The problem is the European Banks followed the Republican Plan. Thus the US is better off than them right now.

Yeah..."Right now."

Oil spiked and fell, as it rises again we will see inflation, possibly massive inflation.

PirateFreedom: Oil spiked and fell, as it rises again we will see inflation, possibly massive inflation.

Thanks, Obama!

12349876: Lost Thought 00: Good.

What do you mean good. Remember what happened last time Europe was in an economic crisis?

Resin33: Inflation is bad, and now deflation is bad too?

Geez.. what's good?

You know how you can get heatstroke, and you can also get hypothermia?

The Homer Tax: Resin33: Inflation is bad, and now deflation is bad too?

Geez.. what's good?

This was my thought, too. Apparently "flation" is what we need, but no one knows how to achieve flation.

I know how to acheive flatus.

grimnir: Resin33: Inflation is bad, and now deflation is bad too?

Geez.. what's good?

You know how you can get heatstroke, and you can also get hypothermia?

But Farkers have been assuring me that heatstroke is preferable to hypothermia!

WhileAmericaBurns: But Farkers have been assuring me that heatstroke is preferable to hypothermia!

And you listen to Farkers about this?

Actually, inflation is prefereable to deflation. Inflation does not feed upon itself, while deflation does. A shrunken money and credit supply leads to deflation, which leads to the money supply shrinking as people lose jobs and don't want to spend now, which leads to more deflation. Deflation leads to defaults on secured debts of all kinds as the debt collateral's value falls far below the value of the debt it secures. One of the things that can be done about deflation is to increase the money supply. After you've dropped the interest rate to zero, though, there's not a lot you can do to fix it.

Inflation in a modern, free market economy is normal and healthy. It's a sign of growth, and is good for debtors. It encourages people to spend or invest their money rather than sit on it, which stimulates the economy. Moderate inflation helps debtors to pay back their debts also. It keeps the money moving around.

Hyperinflation can also be a huge problem. It encourages people to spend all their money immediately. Creditors lose their value as debtors pay back their loans with hyperinflated money. One of the things you can do about hyperinflation is to decrease the money supply by raising interest rates, and those interest rates can always be raised higher until the desired effect is achieved.

The key is to keep currency values fairly stable, with inflation between reasonable bounds. If inflation is too high or too low, it is unhealthy for an economy.

Texas with a Dollarsign: This is why I thought that a European currency was a stupid idea. In the old days, each country had their own currency, so if one country fell, it would really only directly affect that country, and other more stable countries could step in and offer assistance to minimize the damage. Now, with the Euro, if Germany's economy tanks and the Euro falls, it affects 16 other countries simultaneously. France can't easily step in to help Germany if their economy is in trouble too thanks to the Euro's collapse.

Granted, the domino effect still existed under the old system, but it is much easier to stop 16 smaller dominoes than one large domino.

/Besides, I like collecting foreign coins
//Not an economist

Man is your understanding of that backwards.

DamnYankees: Well that's no good.

Actually deflationary effects are not ALL bad. In the long run most inflationary effects ultimately become deflationary right before the uptick begins. Deflation itself isn't all bad if you keep your head above water, you can easily end up with more than you started with long-term.

NEDM: The reason why deflation is worse than inflation can be summed up as so: "Why buy today when my money is worth more tomorrow?"

Soooo, lower prices are bad and everyone should be glad to have the value of their wages destroyed?

So you mean to tell me that nobody is buying computers, Cell phones, MP3 players, Big-Screen TVs, etc? The prices of those have been falling for years, yet people are still buying them.

In fact, the entire 19th century was a deflationary period, yet we prospered as an economy. Prices in an economy naturally fall as production improves.

Methinks you and others need to learn more about economics. Inflation is not good nor is it needed. Once the fallacy of our fiat currency is exposed and we ride out the painfull correction, we will be able to rebuild our economy using sound economic theories and not Keynesian and other economic voodo.



The federal reserve was supposed to maintain the dollars value. Instead, it has debased it.

Crosshair: NEDM: The reason why deflation is worse than inflation can be summed up as so: "Why buy today when my money is worth more tomorrow?"

Soooo, lower prices are bad and everyone should be glad to have the value of their wages destroyed?

So you mean to tell me that nobody is buying computers, Cell phones, MP3 players, Big-Screen TVs, etc? The prices of those have been falling for years, yet people are still buying them.

In fact, the entire 19th century was a deflationary period, yet we prospered as an economy. Prices in an economy naturally fall as production improves.

Methinks you and others need to learn more about economics. Inflation is not good nor is it needed. Once the fallacy of our fiat currency is exposed and we ride out the painfull correction, we will be able to rebuild our economy using sound economic theories and not Keynesian and other economic voodo.



The federal reserve was supposed to maintain the dollars value. Instead, it has debased it.

I'm not a Keynesian, but I think you're mistaken about what deflation is. Deflation is not necessarily a general fall in prices, but a contraction of the money supply.

WhileAmericaBurns: I'm not a Keynesian, but I think you're mistaken about what deflation is. Deflation is not necessarily a general fall in prices, but a contraction of the money supply.

Deflation isn't necessarily relative to prices as much as value. Deflation is the same as devaluation. Specifically devaluation of assets. Inflation is valuation of assets and devaluation of currency.

Managed inflation encourages investment and spending in general. Average inflation runs about 5-8%.

Deflation is typically accompanied by unemployment due to market contraction which can cascade into a much worse scenario when the value of everything is questioned.

See neighborhoods that have empty lots that have sat fallow for decades because no one can value them because no one actually wants them. Now imagine the whole country that way.

Deflation means everyone trying to sell assets/hoard currency at once, and no one trying to buy.

Inflation means that people are encouraged to trade currency for 'hard assets'. It can be a bad thing if unmanaged, but deflation is almost invariably a negative economic indicator.

kasmel: WhileAmericaBurns: I'm not a Keynesian, but I think you're mistaken about what deflation is. Deflation is not necessarily a general fall in prices, but a contraction of the money supply.

Deflation isn't necessarily relative to prices as much as value. Deflation is the same as devaluation. Specifically devaluation of assets. Inflation is valuation of assets and devaluation of currency.

Managed inflation encourages investment and spending in general. Average inflation runs about 5-8%.

Deflation is typically accompanied by unemployment due to market contraction which can cascade into a much worse scenario when the value of everything is questioned.

See neighborhoods that have empty lots that have sat fallow for decades because no one can value them because no one actually wants them. Now imagine the whole country that way.

Deflation means everyone trying to sell assets/hoard currency at once, and no one trying to buy.

Inflation means that people are encouraged to trade currency for 'hard assets'. It can be a bad thing if unmanaged, but deflation is almost invariably a negative economic indicator.

Here's a part of the equation I don't understand. If more people are saving, then (assuming they keep their money in banks) isn't there more money available for lending? I just don't understand why it's assumed that if people aren't spending then their money is just sitting under a mattress.

WhileAmericaBurns:
Here's a part of the equation I don't understand. If more people are saving, then (assuming they keep their money in banks) isn't there more money available for lending? I just don't understand why it's assumed that if people aren't spending then their money is just sitting under a mattress.

Just increasing the money supply to banks will increase money for lending, but if you're a consumer buying a new car or a company buying a new IT system, and the economy's in the shiatter and you don't know if you'll have a job next week, plus prices are falling, you might put off borrowing and spending for a bit. If everyone stops spending you'll end up with severe deflation but everyone has saved lots of cash, like Japan where consumers have an average of four years of outgoings saved.

bartink: thirdspade: Pretty sure, yeah. I don't follow the exchange rates between countries, but pre-economic collapse, the Euro and Pound were surpassing the dollar significantly because the dollar was inflating at a higher rate.

And the dollar came roaring back once the collapse began.

Where's the roar?

Something got screwed up with those links. I'll try again:
http://www.x-rates.com/d/EUR/USD/graph120.html
http://www.x-rates.com/d/GBP/USD/graph120.html
http://www.x-rates.com/d/CHF/USD/graph120.html

WhileAmericaBurns: I'm not a Keynesian, but I think you're mistaken about what deflation is. Deflation is not necessarily a general fall in prices, but a contraction of the money supply.

Oh I know what deflation is. I was just pointing out that the idea that "deflation = bad" is a crock cooked up by politicians who want to inflate a currency because it allows them to tax us through inflation.

People buy and invest when they feel it will make them the most benifit.

unyon: Wait, you mean to tell me that prices are declining from the highs generated during an artificially created speculative bubble?

Shocking. I implore you all to initiate irrational activity based on the belief of your imminent demise.

Please check back in with us when you have had an intermediate macro course. You also might want to look into the difference between commodity and asset inflation.

WhileAmericaBurns: Here's a part of the equation I don't understand. If more people are saving, then (assuming they keep their money in banks) isn't there more money available for lending? I just don't understand why it's assumed that if people aren't spending then their money is just sitting under a mattress.

Deflation causes banks to fail. An average banks value is only 10-15% liquid at most. The rest is in assets and financial investments(loans-liens). As those assets lose value and no one will buy them, people see the bank lose value and put their cash deposits at risk. Which is why runs on banks happen.