Do you think there is any chance of Deflation in the US ?

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  • Kard63
    Confirmed User
    • Nov 2003
    • 8944
    #1

    Do you think there is any chance of Deflation in the US ?

    If McCain gets elected (lets just pretend please. move past the political bullshit and talk economics.) and he doesn't bail out everyone related to the mortgage crisis do you think there is a chance of deflation in the US? Interest rates are already low, they couldnt go A LOT lower. On the other hand it seems like dumb americans are always willing to spend more, even when they don't know what tomorrow brings or how they will survive. That seems like it make it less likely.

    I'm all liquid, no debt, money in the bank. I could use some deflation.
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    • Fat Panda
      Porn is Dead. Move along.
      • Aug 2006
      • 13296
      #2
      Deflation sure sounds good to the average person, but deflation is actually a 100x's worse than inflation. With deflation incomes and prices fall, however debt payments (car, mortgage, boat loans, etc) stay the same. Loads of people default and the economy tumbles hard...amongst other problems...

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        • Kard63
          Confirmed User
          • Nov 2003
          • 8944
          #3
          Originally posted by SAC
          Deflation sure sounds good to the average person, but deflation is actually a 100x's worse than inflation. With deflation incomes and prices fall, however debt payments (car, mortgage, boat loans, etc) stay the same. Loads of people default and the economy tumbles hard...amongst other problems...
          If it sounds good to the average person then the average person doesn't understand, lol. I don't have debt of any kind and I have loot in the bank.

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            • AlienQ - BANNED FOR LIFE
              best designer on GFY
              • Mar 2003
              • 30307
              #4
              I Invented Loot in the bank.

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                • woj
                  <&(©¿©)&>
                  • Jul 2002
                  • 47880
                  #5
                  I'm not sure hoping for deflation is the best strategy now a days... by keeping money in the bank right now, you are probably earning negative inflation adjusted return...
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                    • Kard63
                      Confirmed User
                      • Nov 2003
                      • 8944
                      #6
                      Originally posted by woj
                      I'm not sure hoping for deflation is the best strategy now a days... by keeping money in the bank right now, you are probably earning negative inflation adjusted return...
                      I probably am but I've wanted to buy a house for some time. Just waiting for the bottom to hit around here. Don't wanna lock it up in something when I don't know when I'll need it.

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                        • dready
                          Confirmed User
                          • Oct 2002
                          • 5247
                          #7
                          Deflation would probably only happen if people stopped borrowing money.
                          ICQ: 91139591

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                            • pocketkangaroo
                              Confirmed User
                              • Jan 2005
                              • 8452
                              #8
                              Deflation is horrible but isn't it really the only thing that would fix the economy long term? I just think bailing out banks even more (along with homeowners) will keep homes at an artificially high level that they shouldn't be at. Fact is that homes are overpriced and the quicker they get back to reality the better off the economy is.

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                                • teomaxxx
                                  Confirmed User
                                  • May 2003
                                  • 2737
                                  #9
                                  so far FED is doing everything they could, to have Japan kind of scenario (zombification of banks), while trying to re-inflate. Hard to tell what will be the outcome of it....But to reinflate economy without raising wages is not possible, Someone should tell them...

                                  But at the end there is not enough money in the system to backstop all big players in case of "Credit Default Swap" explosion, which would bring deflation into the game.
                                  Last edited by teomaxxx; 05-16-2008, 01:16 AM.

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