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It can be look at how property prices in Japan crashed negative equity is never a good thing

by mauricemir 11y ago

mrec 11y ago
Negative equity is a damn sight better than unaffordable housing.
- TheOtherHobbes 11y ago
  If you live in the UK you get savings deflation and unaffordable housing. It's a win win! The greatest trick the anti-Keynesians ever pulled was selling governments on the nonsensical belief that sado-monetarism is ever good for anyone who isn't already extremely rich.
- moomin 11y ago
  Sadly, the two appear to be BFFs.
brc 11y ago
So some properties in japan once crashed after a boom? As opposed to 80-100 years of devaluation of the money that you earn, save and spend? A stated above 'the greatest trick the Keynesians ever pulled off was making everyone fear even the slightest deflation, while convincing them that year-in, year-out inflation as not only natural, it was a good thing. The main benficiaries of inflation are the people who get to spend the newly minted money first - because they get to use created money to buy assets at the valuations for the existing amount of circulation. By the time the inflation works it's way down the chain, your cup of coffee has jumped 50c but you haven't had a commensurate increase in income.
- mauricemir 11y ago
  Crashed very very badly - they had 100+ year mortgages that where handed down from generation to generation. You can imagine the will reading "I leave my Rolex and and the remaing 40 years of my mortgage to my son/daughter"
adventured 11y ago
Japan's real estate bubble crashing had nothing to do with deflation. The claim that it did, is one of the greatest myths in all of economics. They've had zero net deflation on their consumer price index since ~1989. The US dotcom bubble imploding was also not deflation. Japan got a real estate bubble from extreme monetary expansion flooding into the economy in the 1970s and 1980s. They got a popped bubble when that fake economic party ended with monetary expansion falling to single digits in the early 1990s. The reduction in that rather massive monetary expansion forced their economy back to reality. The US real estate bubble occurred in part for the same reason. The Fed juiced the economy after 9/11 to attempt to avoid a recession. When reality hit, Japan shifted to accumulating vast amounts of debt to fake a better economic condition than what they really had. That overwhelming debt has continued to drown their prospects as the years go by, sapping growth potential. You can see this same exact scenario playing out in China right now. A bubble imploding is not deflation, just as price contraction on the CPI is not inherently deflation. See: flat screen tv prices, computing prices, etc. The US enjoyed decades of general price stability and contraction due to vast automation and economies of scale after the civil war, none of which was deflation (monetary contraction).
- brc 11y ago
  Well, you're correct but the armies of Keynesian economic graduates that roam the streets will have trouble absorbing what you write. Eventually the stark failure of borrow and spend 'stimulus' policies will get through. Maybe after another few decades of wasted economic opportunity and stagnation.

It can be look at how property prices in Japan crashed negative equity is never a good thing

mrec 11y ago

Negative equity is a damn sight better than unaffordable housing.

TheOtherHobbes 11y ago
If you live in the UK you get savings deflation and unaffordable housing. It's a win win! The greatest trick the anti-Keynesians ever pulled was selling governments on the nonsensical belief that sado-monetarism is ever good for anyone who isn't already extremely rich.
moomin 11y ago
Sadly, the two appear to be BFFs.

brc 11y ago

So some properties in japan once crashed after a boom? As opposed to 80-100 years of devaluation of the money that you earn, save and spend? A stated above 'the greatest trick the Keynesians ever pulled off was making everyone fear even the slightest deflation, while convincing them that year-in, year-out inflation as not only natural, it was a good thing. The main benficiaries of inflation are the people who get to spend the newly minted money first - because they get to use created money to buy assets at the valuations for the existing amount of circulation. By the time the inflation works it's way down the chain, your cup of coffee has jumped 50c but you haven't had a commensurate increase in income.

mauricemir 11y ago
Crashed very very badly - they had 100+ year mortgages that where handed down from generation to generation. You can imagine the will reading "I leave my Rolex and and the remaing 40 years of my mortgage to my son/daughter"

adventured 11y ago

Japan's real estate bubble crashing had nothing to do with deflation. The claim that it did, is one of the greatest myths in all of economics. They've had zero net deflation on their consumer price index since ~1989. The US dotcom bubble imploding was also not deflation. Japan got a real estate bubble from extreme monetary expansion flooding into the economy in the 1970s and 1980s. They got a popped bubble when that fake economic party ended with monetary expansion falling to single digits in the early 1990s. The reduction in that rather massive monetary expansion forced their economy back to reality. The US real estate bubble occurred in part for the same reason. The Fed juiced the economy after 9/11 to attempt to avoid a recession. When reality hit, Japan shifted to accumulating vast amounts of debt to fake a better economic condition than what they really had. That overwhelming debt has continued to drown their prospects as the years go by, sapping growth potential. You can see this same exact scenario playing out in China right now. A bubble imploding is not deflation, just as price contraction on the CPI is not inherently deflation. See: flat screen tv prices, computing prices, etc. The US enjoyed decades of general price stability and contraction due to vast automation and economies of scale after the civil war, none of which was deflation (monetary contraction).

brc 11y ago
Well, you're correct but the armies of Keynesian economic graduates that roam the streets will have trouble absorbing what you write. Eventually the stark failure of borrow and spend 'stimulus' policies will get through. Maybe after another few decades of wasted economic opportunity and stagnation.