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"When shoppers see persistent price declines, they hold out on buying things." and yet I keep buying computers... I don't think I agree with this statement (unl

by math 12y ago

"When shoppers see persistent price declines, they hold out on buying things." and yet I keep buying computers... I don't think I agree with this statement (unless there is massive deflation).

EricBlair 12y ago
Of course not, but that's the fallacy they like to use to convince people that deflation is a bad thing. It's only a problem for those in debt. They want to inflate away those debts and this goes contrary to that. There's a reason why a Coke no longer costs a nickel and these guys will tell you it's a good thing when it costs a $1000. Never mind that you will essentially be earning the same wages when that comes about. You saw that just a few years ago in CA when oil was close to $150 and people were quitting their jobs because of the cost of the commute. Bloomberg, like the Economist and FT represent the status quo. They print whatever propaganda they're instructed to by the state. When you hear about the CIA and MI6 having agents working for news organziation, these guys are at the top of the list. Ooooooh 'conspiracy'... that has been documented a thousand times over many decades. This game has been played out many times before over the past century and then some. It's a tiresome old debate.
Chathamization 12y ago
Hmm, I’ve heard multiple people talk about jumping in during the housing bubble because they thought if they didn’t buy right then the price would keep going up. And I’d say that there’s pretty good evidence that people will buy things sooner if they think that waiting would entail a price increase (which is why sales are so effective). So if people are expecting the price to rise, they’re more likely to make a purchase, and if they aren’t expecting the price to rise they’re less likely to. I don’t think it’s too much of a jump to think that if the price of something is going to go down next week, people are more likely to hold off on purchases. Though I imagine a bigger issue is the need for investment. When there’s stagnation firms tend to sit on a lot of cash, because they believe that money slowly losing value (low inflation) or even gaining value (deflation) is preferable to the few and possibly risky investment opportunities they see. This causes credit and investments to dry up. This hording behavior, as well as the wage inflexibility mentioned above, ends up being a major drag on the economy. On the other hand, with a decent rate of inflation firms are going to be making sure that their money is working, because if it’s just sitting there it’s going to be losing money year after year.

by math 12y ago

"When shoppers see persistent price declines, they hold out on buying things." and yet I keep buying computers... I don't think I agree with this statement (unless there is massive deflation).

EricBlair 12y ago

Of course not, but that's the fallacy they like to use to convince people that deflation is a bad thing. It's only a problem for those in debt. They want to inflate away those debts and this goes contrary to that. There's a reason why a Coke no longer costs a nickel and these guys will tell you it's a good thing when it costs a $1000. Never mind that you will essentially be earning the same wages when that comes about. You saw that just a few years ago in CA when oil was close to $150 and people were quitting their jobs because of the cost of the commute. Bloomberg, like the Economist and FT represent the status quo. They print whatever propaganda they're instructed to by the state. When you hear about the CIA and MI6 having agents working for news organziation, these guys are at the top of the list. Ooooooh 'conspiracy'... that has been documented a thousand times over many decades. This game has been played out many times before over the past century and then some. It's a tiresome old debate.

Chathamization 12y ago

Hmm, I’ve heard multiple people talk about jumping in during the housing bubble because they thought if they didn’t buy right then the price would keep going up. And I’d say that there’s pretty good evidence that people will buy things sooner if they think that waiting would entail a price increase (which is why sales are so effective). So if people are expecting the price to rise, they’re more likely to make a purchase, and if they aren’t expecting the price to rise they’re less likely to. I don’t think it’s too much of a jump to think that if the price of something is going to go down next week, people are more likely to hold off on purchases. Though I imagine a bigger issue is the need for investment. When there’s stagnation firms tend to sit on a lot of cash, because they believe that money slowly losing value (low inflation) or even gaining value (deflation) is preferable to the few and possibly risky investment opportunities they see. This causes credit and investments to dry up. This hording behavior, as well as the wage inflexibility mentioned above, ends up being a major drag on the economy. On the other hand, with a decent rate of inflation firms are going to be making sure that their money is working, because if it’s just sitting there it’s going to be losing money year after year.