On Demand
Deflation Nation
Wednesday, November 26, 2008
Peter Coy, economic editor at Business Week, talks about rising concerns over deflation in the US.
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Well, we've been sold the fact that everything went up including food because of higher fuel causing production and delivery have gone up. Now that fuel has gone down why are food prices still up and still rising!?
Can't we just drop cash from a helicopter to fight deflation?
Tony
I agree; lower oil prices ARE a good thing, for sure.
Well, except for the whole "destroying the earth – and by extension, ourselves – by relying on non-renewable energy sources" thing. Sure, our only hope for survival would be to get away from that, but why start taking the long view now?
My rent went up. Food prices don't seem to have come down -- not here in NYC anyway. And I'm still paying the same for electric and gas.
So what prices have come down?
And after I add up all of the above, all of my income is gone anyway, so it makes no difference to me if cars or radios or bed pillows are costing less.
My husband and I locked a 30 year mortgage at 5.5% yesterday. Is this a pretty good rate?
Also, as first time home buyers, what further benefits can we reap from the current situation? Tax credits and benefits? Will yesterday's consumer bail-out proposal help us? How?
Dina -- the caller about the apparently attractive loan offer -- should check the fine print to see what the interest rate lofts up to after 18 months. And she should check to see what happens if she is late on a payment. Chances are the interest rates can be raised to something insane like 30%.
Setting a ceiling of, say, 8 or even 14% on credit card charges
would do more for borrowers than any bailouts to either banks or consumers. REGARDLESS of deflation/inflation.
no responsible borrowers are going to borrow from a credit card issuer without knowing the cost!
one simple, moral law.
Yay...He didn't tell us to go shop at Wal Mart!
It's good for individuals to save more of their hard-earned money, right? It makes me very uncomfortable that the U.S. and world economies seem to be built upon the fact that Americans will buy an endless amount of stuff (including both necessities and unnecessary stuff & services). Compare Americans with people in China, for example, where average incomes are much lower but the savings rate is very high. Granted, the recent decrease in consumer spending is too abrupt, but it is seems that American consumers hear two conflicting messages:
1) save your $, invest for retirement, etc;
vs.
2) spend, spend, and spend some more, and keep the economy going.
Aren't we helping these banking criminals out enough by paying for these bailouts? There's a difference between being helpful and being a sucker. Save your money, people. At least whatever money you're allowed to keep.
Someone asked what Americans can do to help the economy. They can protest the government giving billions of dollars to bail out corporations. They can protest the government continuing to wage two illegal wars. They can refuse to buy products that damage the economy and buy healthy products, whether it be hybrid cars, local food, fair trade products, etc. There's plenty that we can do!
Speaking of Japan, how much of the downturn has to do with demographics? Our economy soared while baby boomers were in their peak earning years, but now as they ready for retirement things seem to be slowing down.
why are the views of Peter Shiff so ignored with regards the present crisis?
I keep hearing the refrain that the big financial companies are "too big to fail". If this is true then it follows that we should save them, but also force them to be divested into smaller companies which don't threaten our financial system. That would also encourage job growth, and provide a disincentive for large companies to take on high risk derivatives.
Prices won't be coming down. Deflation will be temporary; maybe 6 months. The real monster will be inflation. You are going to see inflation like you can't believe starting in late 2009/ early 2010.
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