Inflation or Deflation, where are we going ?

Really2

Graham_Devon wrote: »

Deflation for about 7 months (after the time it starts to deflate).

Then rampant inflation up to possibly a max of 20%.

Better add....IMHO.

Sorry I cant see any inflation until demand and production pick up. To then to got to 20%! I really really can't see it.

Could you explain how this would happen in such a short space of time as I am finding it hard to think of a way it could happen like that.

cowbutt

Short-term deflation, followed by rapid inflation.

Graham_Devon

Really2 wrote: »

Sorry I cant see any inflation until demand and production pick up. To then to got to 20%! I really really can't see it.

Could you explain how this would happen in such a short space of time as I am finding it hard to think of a way it could happen like that.

Why can't you see it? It's happened before. What makes us so special now that it cannot happen?

I am talking about real inflation. The one that hits us most. RPI.

1975, inflation 24.2%
1980, inflation, june 21.9%

StevieJ

Graham_Devon wrote: »

Why can't you see it? It's happened before. What makes us so special now that it cannot happen?

I am talking about real inflation. The one that hits us most. RPI.

1975, inflation 24.2%
1980, inflation, june 21.9%

1975 sent us to the IMF with the begging bowl, 1980 was result of a large Vat increase.

http://news.bbc.co.uk/1/hi/uk_politics/4553464.stm

Graham_Devon

StevieJ wrote: »

1975 sent us to the IMF with the begging bowl, 1980 was result of a large Vat increase.

2009 we start printing money.

The point is again, we don't know whats going to happen yet. I did say it was my humble opinion and people don't have to agree.

I know what happened in those years. It proves nothing really. RPI was still at those levels. So I don't see why we can't go back there again. But I don't pretend to know whats going to happen in the next 1-3 years. And in my opinion, we are not even started yet.

kt63_2

I think there's going to be some serious inflation sooner or later. Governments around the world see increasing the money supply (printing money) as the only way out of this mess. This will lead to inflation and will effectively let the people who borrowed loads of money off the hook as the inflation will erode debt. At the same time savers will be hit as the value of their money declines, but at least this will cause people to go out and spend money.

Governments realise that the only way out of this mess is to do what feels morally wrong - i.e. bail out those who have behaved recklessly at the expense of those who have acted prudently (savers).

The trouble is that by acting in this way (printing money) they risk mega inflation if people lose trust in fiat currencies.

mewbie_2

kt63 wrote: »

I think there's going to be some serious inflation sooner or later.

Pity. I was hoping for the more frivolous sort.

Arcaine

Once you get out of the short term it gets difficult. But short term we are definately looking at monetary deflation. I read an excellent article today that sold me on the deflation issue.

http://globaleconomicanalysis.blogspot.com/2009/02/fiat-world-mathematical-model.html

I would be interested to see what other make of it.

Really2

Graham_Devon wrote: »

Why can't you see it? It's happened before. What makes us so special now that it cannot happen?

I am talking about real inflation. The one that hits us most. RPI.

1975, inflation 24.2%
1980, inflation, june 21.9%

But they were inflation caused recessions.
A Recession leading to high inflation at the end as never happened to the UK in recent history.
Also being a global recession every economy and currency is suffering so this is like neither of those event.

Surely we should have very high inflation now if it was the same.

mr.broderick

I can't make my mund up.