Deflation Watch pt 153 - International Edition

ninky_2

Generali wrote: »

How are members of the 'ruling elite' not the Government? This is rubbish.

What has it got to do with deflation?

there are those with strong influence in government who are not necessarily part of it. the common interest groups, you scratch my back i'll scratch yours. old boys network type of thing.

what has it got to do with deflation? it was you who brought up japan's deficit...i'd taken it from there.

vivatifosi

Generali wrote: »

If this is what happens, and IMO it is perfectly possible, it implies a pretty rosy future for the middle classes of the world (which includes pretty much every person living in the UK) and a pretty grizzly one for the world's poor. The average person in the UK spends 9% of their income on food for example and gets a pretty varied diet with plenty of prepared food for their money.

Inelasticity doesn't stop at the 9% spent on food though Gen, it has to include the cost of transport and the day to day cost of living somewhere. For many that is a significant part of their budget.

There are many people I know whose discretionary spend is 20% or less once they've paid day to day bills. They aren't thinking 'yipee, plasmas are getting cheaper', instead they are thinking, 'if my food bill goes up a bit more how will I cope if we have another severe winter and I have to spend more on fuel'? This will become more common once benefits are squeezed.

ninky_2

Generali wrote: »

If this is what happens, and IMO it is perfectly possible, it implies a pretty rosy future for the middle classes of the world (which includes pretty much every person living in the UK) and a pretty grizzly one for the world's poor.

what a surprise. capitalism produces a bigger wealth divide yet again. i'd think twice about calling the majority of the uk middle class however. there is also income poverty and asset poverty. whilst the subsistence farmer my be poor they have the ability to feed themselves through access to land etc. many in the uk have some income via the welfare state but no (or negative) assests. should that income (benefits) fail to keep apace with inflation on essentials we will see some very real suffering here.

sabretoothtigger

JP45 wrote: »

Earlier this year I bought a car which is equivalent or better in every respect yet cost less than the ten year old car it replaced. Two days ago I bought a vastly superior HD TV for half the price of the TV I bought 10 years ago.

Thats just technology and its a great thing to be optimistic about in general
Im definitely a fan of that process, there is moores law which has stood for 40 years or so - the state of high technology roughly doubles every two years so its an exponential gain at its core

Making cars and food also advances but not at that pace

I dont think we can rely on that to produce deflation in the future. Moores law has stood true but if anything its possibly slowing not getting faster
So that deflationary effect right now has not increased over 1980 to 1990 when computers started to make an effect and replace workers, reduce costs, etc


I would argue most people in the uk do not know true poverty and middle class describes the majority. If some choose to spend their income on alcohol, cigarettes and lottery tickets they'll have little money for food and be asset poor but thats stupidity not poverty.

If there was no welfare state then I might agree but its a great bonus to being in the uk and we take it for granted unfortunately.
I'd agree some might be miserably worse off but its still not poverty compared to most in the world

capitalism produces a bigger wealth divide yet again

unbiased capitalism would be something like somalia where there is little government and its a market economy. 50% of UK GDP is government so I dont think we can compare to that



Deflation vs bonds - http://finance.yahoo.com/news/How-to-Invest-for-Tomorrows-fool-2926906475.html?x=0&.v=1
Most deflated asset right now is natural gas due to gigantic oversupply (tech advances) and usa preference for imported oil.
My general take is invest in deflationary factors like tech or gas even

If we're talking averages though, I still opt for inflation