Now if only we could have deflation, huh!
Dude don’t tempt me on a friday! I still believe the product of the probability of deflation and the damage is less than the comparable on the opposite side of the spectrum when considering the entire population of the US.
Not suggesting that - in my backyard, there are quite a few MIT professors bringing forth evidence of the complete opposite - but rather mainstream academia.
You gotta keep in mind the debt. You’re too focused on cash which is the absolute minority of asset balances, with most non-cash assets passing through inflation. You’re focused on the erosion of cash value but deflation erodes much larger equity balances and makes real debt balances rise. Also, evidence just broadly supports my stance on the risks.
I’m focused on cash rightly so - this notion around debt is likely the derivation of inflation - is just one of the problems i’m looking to solve.
As for this being supported by historical evidence - we covered this and it was deemed untrue. One must account for not only the direct impact of inflation vs deflation but the amount of times these events occurred and the lead up to both (i.e. was a deflationary period the result of inflation…). Finally, and perhaps most importantly, I am speaking on behalf of the greater population and not a singular metric such as GDP which overwhelmingly favours a select, minute, portion of the population. You must realize, i am a man for the people, a modern-day jacked vox populi.
Lol, that’s ridiculous. It’s not untrue, you just didn’t listen. One’s controllable and never hits major economies with a strong central bank, the other (deflation) we still have no answer for. Debt isn’t a problem given that healthy debt levels fuel growth. It also allows the segment of the population that aren’t silver spooners to do things like own homes. Also, GDP is probably the broadest metric out there and it doesn’t take a super genius to know that debt levels as a percent of net worth are greatest among the bottom half of the population. The reverse is true for cash. So while I appreciate your focus on debt its precisely because you’re the opposite of a man of the people nobody in the bottom 50% is worried about their nonexistent cash savings balance.
there is nothing risk free about treasuries. this is outdated thinking. anyone who invests in a us 30 year is a sap.
BS - man are you trying to heat me up, dont get me started with central banks haha.
As for the concept of debt favoring the masses, i couldnt be more against this view. Yes, given today’s high valuations of asset values, one must employ leverage to join the coveted classification as “asset owner”. Then they spend the next greater proportion of their lives working to pay this off. If this is the picture you wish displayed, sure, debt surely “benefits” the greater population.
Conversely, let’s explore this contemporary, perverse, subject that one’s currency holds its value and traditional assets (i.e. property) maintains a fairly stagnate price and the masses are able to purchase property, or at least the majority of it, with cash. Before you jump to the common supply/demand topic (i know it’s practically beaming out of your head prior to this concept), ignore it for a moment because it doesnt play nearly as big of influence as one thinks. Contrast this to the aforementioned.
Now, going back to my original point, it’s not that deflation is better than inflation - do not argue this concept bc it’s not my intention. Let me place into terms imbued into the memory of this group, P(deflation)(loss given deflation) is < P(inflation)(loss given inflation) when we consider the population sample, that is the true population sample of residents of this land.
Supply / demand is actually the most significant influence. Point in case, my parents bought a house in a rural area for about $400k in 1994, today its worth about $450k. A nice four bedroom costs $400K in Pittsburgh but $1.5M in Boston. In Detroit home values fell consecutively for the last 17 years despite nearly two decades of inflation and money supply expansion. Why do you think that is Boston Bubble Boy? 
Prove your statement.
This is false. Maybe in the 50’s it was true. But we now have the tools to fix it. It’s like saying syphilis is a life ending disease. We have penicillin now. We have no response for deflationary spirals. That is like cancer. Yes lots of people historically have gotten syphilis, but we can cure and prevent it now. Cancer is still a nightmare. Weak analysis, next.
All in good fun, but this is just not a great line of reasoning.
plz xplain. tAnks
YES!
Man, I fell out of my chair laughing in 2002 reading CFA1 “risk free rate bla bla”, these are default-certain back-by-nothingness ponzi bonds.
i disagree with pa. i feel that govt will cut benefits before they ever default. or they will inflate the debt away. so if you are considering lending to the govt. prepare to get some lube. cuz ur ass is gonna hurt worse than what happened to you in l3!
so say you lent $100 collecting the 3% in coupon and expecting 100 bucks in 30 years.
your npv will be dependent on long term inflation:
say prices were stable with 0% inflation: NPV = $90
inf at 3%: NPV = 0
inf doubles to 6%: NPV = -$41.3
you are playing chess when decoding these issues. I didnt say S/D doesnt impact pricing but rather has less influence than one would think. In fact, id venture to say a lot of the implications of a debt bearing society are conveniently placed into the easy to comprehend S/D bucket. Ftr - I live in Dorchester, which just exemplifies my position as man of the people.
As for your disease comparison - wrong. Using your same example, id relate deflation to an unknown, rather uncommon disease such as ALD, and inflation to a rather known disease with treatment options such as heart disease. The former, uncommon and not really discussed, was proven to have treatment options by two parents without any medical background (you all may know the movie Lorenzo’s Oil). The latter, very common and you see it all around you, is accepted and takes a while to kill you - but dont be fooled it will.
Although i enjoy this banter, let’s just agree to disagree until a future date. For the time being please continue to defend your position on tariffs against the mainstream and perhaps you’ll start to realise the hypocrisy.
Again, no evidence provided supporting any claims.
Fine:
Proposition - Deflation is uncommon:
Evidence: In the past 60 years, the United States has only experienced deflation two times. Once in 2009 with the financial crisis. The other minor deflation happened in 2015, where the CPI barely broke below 0% at -0.1%.[50
Proposition - P(deflation)(loss given deflation) is < P(inflation)(loss given inflation) when we consider the population sample, that is the true population sample of residents of this land.
Evidence: https://upload.wikimedia.org/wikipedia/commons/2/20/US_Historical_Inflation_Ancient.svg
*not only are the less common - they wreak less havoc on the population and tend to recover faster.
Proposition - the severity of recessions/depressions are not caused by deflation, rather the corrective mechanism which will bring things back to normality, rather debt-fueled economies often sparked from inflation
Evidence: look at the root cause of every financial crisis. It’s not caused by deflation… Let’s take the often quoted reason to be so harsh on deflation - the great depression. Total debt to GDP levels in the U.S. reached a high of just under 300% by the time of the Depression. This level of debt was not exceeded again until near the end of the 20th century.
In conclusion, i’d suggest we should be more concerned with inflation rather than deflation.
Now kiss
This reminds me of 2016 or the other times that BS quit because no one was up to his intellectual standard.
No see, you did it again, the bold claim has nothing to do with what you showed. I didn’t argue deflation was less common, I’ve said that from the onset. Deflation causes further waves of circular defaults because it increases the real value of debt burdens and causes people to hold lower inventories. Basically you just proved my point. You showed me what we agreed on (it’s more common) then refused to draw any real direct linkage to proving its more destructive.
Again, you missed the point and didn’t prove your point. Nobody said deflation CAUSES crises. The argument from the onset has been that if you either enter a crisis while in deflation or it develops during the crisis it can form a deflationary spiral AS A RESULT and once there it is uncorrectable. You’re basically just showing that you didn’t bother to understand the principals you’re arguing against (and which were presented) which is why your case gets written off so easily.
i asked quora which is worse inflation/deflation.
lotta bsds said inflation or hyperinflation is far worse.
deflation has an end, and that end is when prices fall fast enough, and credit recovers. so say bankruptcy last 7 years. then another 5 years to rebuild credit. so 10 to 15 yrs?
hyper inflation on the other hand indicates a lost of trust on the fiat currency.
that lost of trust is longer lasting and causes more anarchy! i dunno, how’s zimbabwe doing? still shit as far as i know.
i am somewhat mixed lol. not as 100% as before.
most ppl will err in the side of inflation cuz its fun to make it rain on hoes!
There’s actually no natural end to deflation and independent central bank would have made that avoidable.
https://www.economist.com/node/13610845
“The greater of two evils: Inflation is bad, but deflation is worse”
https://money.usnews.com/money/blogs/flowchart/2010/07/16/why-deflation-is-worse-than-inflation
“Why Deflation Is Worse Than Inflation”
“Because deflation is considered to be such a destructive force, and since Bernanke is a student of the depression and acutely familiar with the Japanese deflationary spiral”
Quora for you: https://www.quora.com/What-is-better-inflation-or-deflation
"Inflation is like candy. A little bit is good but have too much of it and it’s bad for your teeth.
Deflation on the other hand is freaking Satan. Tempting but is truly truly devastating."
http://www.economicsdiscussion.net/deflation/why-inflation-is-more-preferable-than-deflation-economics/26086 “Why Inflation is more Preferable than Deflation? | Economics”