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I've been reading many recent stories predicting inflation due to the large increase in deficits and bailout/stimulus spending, and predicting deflation due to a worldwide recession and unemployment.
Obviously, both cannot happen simultaneously.
Of these two options, which do you see as more likely the coming 5-6 years?
We are currently in a deflationary period. Hopefully it will be followed by a inflationary trend, the only question is how severe will that upward pressure be due to the deficit.
Location: Sitting on a bar stool. Guinness in hand.
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CA you should move this to the business forum to get a better response.
Now in my opinion we are going to go through another year or two of deflation and then start to head into inflation. Which may not be a bad thing as long as that inflation stays under control.
CA you should move this to the business forum to get a better response.
Now in my opinion we are going to go through another year or two of deflation and then start to head into inflation. Which may not be a bad thing as long as that inflation stays under control.
I had thought about that, but wanted to get a perspective from the folks who discuss politics, and the meaning of decisions on the economy.
I may move this to the Business Forum after a run here, especially if there is a lack of interest in critically discussing it in this forum (a distinct possibility).
For the average American, inflation is the MUCH better scenario. How would you handle it if your debt payments (home, car, credit cards) remained at their current levels, but your income dropped?
Whether we suffer Argentina like hyperinflation or Zimbabwe like hyperinflation will depend on when government will stop the TARP and New New Deal spendaholic lunacy.
We won't be fortunate enough to replicate Japan because Japan was both a creditor nation as well as a high export/productivity country, which provided real value for the Yen (as evidenced in the currency crushing the dollar even in our "deflationary" epoch).
Price and exchange controls are coming, but that will only lengthen the pain and prolong the slump of the currency.
For the average American, inflation is the MUCH better scenario. How would you handle it if your debt payments (home, car, credit cards) remained at their current levels, but your income dropped?
Inflation will discourage savings, and will ultimately cascade on itself, and become runaway FAR worse than the 70s.
It will wipe out debts, but force those currently in retirement to re-enter the workforce, crowding out the job market.
I gave this thread a run in P&OC, but didn't get much member participation. It may be of more interest over here.
That was a waste of time. They are still arguing over Sarah Palin.
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