Comments on: Don’t be afraid of deflation Wed, 07 Oct 2015 17:23:32 +0000 hourly 1 By: RobertMorrisIV Thu, 06 Feb 2014 00:04:18 +0000 The head of the IMF brings to the table all the experience of a French lawyer who never studied economics. Deflation is a word that was relevant in the 1930s UK when Hayek and Keynes theorized about policies that would end the UK’s massive depression. Today only those oriented to the polices of the 1930s use it. Any one knowledgable about the problems and policies relevant today, eighty years later, and how to identify “experts,” “analysts,” French lawyers, and Federal Reserve officials would do well to read something from this era’s premier economists, Stigler and Lindauer. They certainly would not agree that the policies of the past are relevant. Try “Inflation, Unemployment and Government Deficits” if you are a layman; “The General Theories of Inflation, Unemployment, and Government Deficits” if you are a professional economist.

By: rocque Mon, 03 Feb 2014 23:12:15 +0000 Debt is indeed a big problem. But to say that ” the authorities soon came to their senses, rescuing banks, insurers and General Motors”? Big banks should have been saved, AFTER they were cut into tenths. General Motors? Maybe. They actually produce something. Banks and insurance companies do not produce anything. They do have their place however. Contrary to the AT&T commercial, bigger is NOT better. Smaller banks respond to individuals better. Policies are geared to the community.
Still, we the 99% have the opportunity to correct the wrongs of congress. If EVERYONE simply moved their money to a credit union there would be no banks too large to fail. What is preventing us? Nothing. Don’t buy from Walmart, etc. Find a local retailer.
Overall, I find the arguments in this article weak and unsubstantiated.

By: UScitizentoo Mon, 03 Feb 2014 07:03:20 +0000 > Don’t be afraid of deflation
Why would I be afraid of something I’ve never experienced? Currently we are in massive inflation. Price of barrel of oil in 1998 = 10$ Price of barrel of oil today = 120$. Today I pay 6 dollars for a gallon of milk. The fed is printing a trillion dollars a year. What did you expect printing a trillion dollars a year, deflation?

By: tmc Sat, 01 Feb 2014 16:49:25 +0000 Excellent article Mr. Hadas.
The generl public is not afraid of deflation. Truly they wouldn’t know what you were talking about, but if they did, they would welcome it, not be afraid of it. Corporations of all sizes are the ones afraid of deflation. So of course, so are the politicians and most economists.

By: Nextclick Sat, 01 Feb 2014 03:39:19 +0000 The big issue that faces Policy Makers around the globe in 2014 will be as follows; the cost of free, deflation in 2014 and beyond. Major companies look to form monopolies or near monopolies, this has been made easier by the Internet as they now have global reach for a lower cost base.

The pivotal point is this, the business model of these businesses is to offer a particular service for free (the ultimate deflationary force), eg Google and Facebook, as companies they absolutely get it.

These companies sell advertising and collect personal and private information that the consumer so eagerly hands over in exchange for FREE, nada, zippo, nothing, the companies then use this information to better target their audience and make additional money by selling this information to third parties who then use it themselves.

If you look at the top 500 websites by popularity you will notice that the majority offer services for free.

How many people would pay for Facebook if it wasn’t free, you think they want to find out? 
This means that wealth is then concentrated at the top and what follows is a hollowing out of the middle class.

And so it began. As more things become digitised the cost of distribution falls, and jobs are further eroded, e.g. iTunes and software distribution, e.g. Music and movie Industries.

How does one keep their job when fewer people are required to perform a task, the company they work for is receiving less revenue and making less profits?
This may end badly! I expect we will continue to see anger increase as more people are thrown on to the unemployment scrapheap.

By: daviddenton Fri, 31 Jan 2014 18:05:10 +0000 The fall out from emerging markets will result in much lower import costs in the EZ which won’t help inflation and this combined with stagnation in export markets and at home could be terminal. e-nhs-accident-waiting-happen.html

By: UnicoiLew Fri, 31 Jan 2014 15:44:06 +0000 A “little” Deflatiion would be nice for one approaching retirement and a fixed income. Chasing inflation is a young mans’ game. Promoting inflation in order to minimize societal debt doesn’t seem like a healthy, sustainable track to me.

By: JWL Fri, 31 Jan 2014 15:32:18 +0000 If you think that deflation is the cause of something [or in the case of Hadas, that it is not the cause of something] then you are standing economics on its head. Deflation is above all a symptom and certainly not one arising from economic success.

By: UnicoiLew Fri, 31 Jan 2014 14:37:17 +0000 A little deflation would be a welcome thing for those of us that are nearing retirement and a fixed income. Chasing inflation is a young mans’ game.

By: Ed62 Fri, 31 Jan 2014 12:44:46 +0000 “If you thought food would be 20% cheaper next year would you give up eating for a year?”

No, but if one thought autos would be 20% cheaper next year, you might continue to drive your junker for another 12 months.

If you thought houses would be 20% cheaper next year you might continue to rent for another year.

If you were a businessman who thought construction costs would be 20% lower next year you would probably postpone your plans to build a new factory.