My Dad

[daepp]

Tabby I've got no quarrel with you. I have been thinking the same way since I left business school.

However, I wonder if there isn't some other economic factor at play that has kept inflation at bay.

Mind you, I've no doubt that the central banks have screwed things up, but I'm trying to think outside the conventional wizzdom!

[tabs]

Originally Posted by daepp

Tabby I've got no quarrel with you. I have been thinking the same way since I left business school.

However, I wonder if there isn't some other economic factor at play that has kept inflation at bay.

Mind you, I've no doubt that the central banks have screwed things up, but I'm trying to think outside the conventional wizzdom!

NO the CB's have not screwed things up they are faced with a dire situation and have used the only means they have to ameliorate the situation.

The American people in particular have not wanted to face a decline in their economic hegemony that started in the late 60's. They would rather continue with the delusion of being a rich nation...

NO DEMAND IS WHAT KEEPS INFLATION AT BAY..you can not raise prices if people are living hand to mouth..and don't keep buying.

It becomes a deflationary environment where all that newly printed money just keeps the bottom from falling out. The currency equilibrium keeps the currencies stable and thus economies stable where an imbalance would cause one or the other economy to go to hyper inflation. .

[daepp]

I was thinking more along the lines of lots of demand:

- but mass production/increased efficiencies/miniaturization
AND
- cheap foreign labor

have kept price growth (inflation) down, despite unbelievable buying and printing by Feds..

Thoughts?

[john70t]

Originally Posted by daepp

I am always surprised that the inflation that was supposed to result from such government profligate spending/printing hasn't materialized.

Not an economist here. Most of it went into the bank accounts of the 1% and never reached street level I would imagine. It's just electronic digits sitting in a computer that represent the growing disparity between the classes and the centralizing of power and influence in the hands of a few just like in the other 20's. The James Bond film Spectre was a documentary btw.

Wages have been stagnant for decades and the consumer price index has to stay low enough to make those goods saleable here. We are good consumers of everything we don't need and always willing to go into debt for life. Thus the cheapening of products and rise of overseas manufacturing to maintain high levels of sales. A few products have slipped the net though such as housing and pickup trucks. The standard banking solution is to allow more consumer debt for whatever the consumer wants, and later get reimbursed by the government.

There are some things I still don't understand about economics though: How massive spending at the street level creates more jobs more consumers and more demand and thus inflation, while a lack of spending during the great depression did the same thing. The ends of the chart wrap around and meet.

[tabs]

Originally Posted by daepp

I was thinking more along the lines of lots of demand:

- but mass production/increased efficiencies/miniaturization
AND
- cheap foreign labor

have kept price growth (inflation) down, despite unbelievable buying and printing by Feds..

Thoughts?

Lets keep it simple..

50000 tv sets produced will sell for 1000 ea
100000 tv set unit cost goes down and sell for 750

This is if the Demand coefficient remains constant. Thus the Global Economy Of Scale. To keep Demand constant..the consumer was given credit starting in the 80s as the consumer ran out of cash and wages became stagnant that credit regime blew up in 08.

If the Demand coefficient changes where the consumer is not making as much has no credit or is out of work

Then those 100000 tv sets produced to entice the buyer will have to be reduced in price to 600. And you have Deflation.

Conversely if Demand should go up those 100000 tv sets will go up in price.

If your currency should suddenly decline in value to the mfgs currency ..then the tv sets will go up in price.

Since 08 consumer Demand has been weak...and prices started to decline...buy 2 get one for free.

The FED printed currency in order to devalue the $ so prices should have gone up. But Consumer Demand has been weak so prices without the FEDs devaluation should have gone down. But with $ devaluation prices stayed more or less constant.


Now with apx 35% unemployment Demand is just about zilch and a massive deflation should take place...but the FED printed Trillions just to keep the Banks open and the economy stable..prices are about constant except for high demand items..

They are not selling ANY CARS..to speak of..so they are offering zero interest for 6 years, no payments for a year and free registration..that is in fact a thinly disguised DEFLATION.

Guns & Ammo are in great Demand as people are scared so prices on Ammo .have about doubled..