Ze, 'Ow you say, Deflation Watch. Eurozone edition

Kennyboy66

antrobus wrote: »

But deflation isn't all bad. After all, there is pretty widespread deflation in a number of markets, such as computers or TVs, and nothing particularly terrible has happened as a result.

This isn't deflation though.

You are confusing falling prices in specific product groups ( usually as a result of exponential increase in demand for products with high fixed costs) with deflation.

Not remotely the same thing.

ILW

Kennyboy66 wrote: »

This isn't deflation though.

You are confusing falling prices in specific product groups ( usually as a result of exponential increase in demand for products with high fixed costs) with deflation.

Not remotely the same thing.

What is your definition of deflation?

Kennyboy66

antrobus wrote: »

I think you need to expand your knowledge of economics. Try the following article for starters - http://eh.net/encyclopedia/article/siklos.deflation

The clue is in the first paragraph. "Aggregate"

Kennyboy66

ILW wrote: »

What is your definition of deflation?

When aggregate prices say RPI or CPI (not just one element) are falling persistently (not just for a couple of months).

antrobus

ILW wrote: »

What is your definition of deflation?

I suspect he only understands 'deflation' being driven by a fall in demand creating a supply glut which forces prices down, as opposed to 'deflation' being driven by technological changes (for example) that expands supply and forces prices down.

As I said before, read this article here - http://eh.net/encyclopedia/article/siklos.deflation - it's quite good on the historical background, and the difference between 'good' and 'bad' deflation.

Kennyboy66

antrobus wrote: »

I suspect he only understands 'deflation' being driven by a fall in demand creating a supply glut which forces prices down, as opposed to 'deflation' being driven by technological changes (for example) that expands supply and forces prices down.

.

A little rich from someone who thought deflation existed if your computer went down in price.

Perhaps your next google search should be debt deflation, which is the real potentially destructive threat.

ILW

antrobus wrote: »

I suspect he only understands 'deflation' being driven by a fall in demand creating a supply glut which forces prices down, as opposed to 'deflation' being driven by technological changes (for example) that expands supply and forces prices down.

As I said before, read this article here - http://eh.net/encyclopedia/article/siklos.deflation - it's quite good on the historical background, and the difference between 'good' and 'bad' deflation.

Surely deflation caused by a supply glut in such things as energy, should be a good thing for an economy? (Unless much of your economy comes from oil say)
It does appear tha teh "deflation" caused by fracking in the US has done them a power fo good.

Graham_Devon

Kennyboy66 wrote: »

When aggregate prices say RPI or CPI (not just one element) are falling persistently (not just for a couple of months).

Surely that just means more individual products making up the basket falling, (i.e. in addition to the current ones falling in price)?

Graham_Devon

Kennyboy66 wrote: »

Perhaps your next google search should be debt deflation, which is the real potentially destructive threat.

This refers back to my point earlier.

if debt deflation is bad, and inflation itself is bad......doesn't this only lead to one solution to the debt problem? That being more debt? With the solution to that being.... etc etc

If the system cannot cope with any reactionary result because of the debt in the system, then the system is broken, isnt it?

I started out on this thread asking what was specifically bad about deflation for the man on the street. It appears it's bad for the man on the street because of how it effects those with the debt. This appaears to me, to be another one of those "if bankers don't get bonuses, we'll all suffer" scenarios.

What I would like to know is what specifically, for us lot, the people on the street, is so bad about deflation? All I've been told is that productivity may decrease and my wages may fall....all I see is that is happening anyway.....just at the same time prices are going up and those with the debt getting away scot free at others expense.

How will it effect my food bill? My mortgage? My water bill? My wages? I'm not so much interested in how it may effect a business or landlord drowing in debt.It would be difficult to use the scare tactic scenarios from history, as others have been ridiculed for doing that the other way round regarding inflation.

antrobus

Kennyboy66 wrote: »

A little rich from someone who thought deflation existed if your computer went down in price.

What, you've never heard of 'tech deflation'? Try;

Deflation in the tech industry
http://www.newstatesman.com/economics/2013/05/deflation-tech-industry

or if your prefer something more academic try;

Computer Hardware Price Deflation And Performance Estimation
http://www.technomics.net/files/downloads/papers/NCCA0403-Comp.pdf

Kennyboy66 wrote: »

...Perhaps your next google search should be debt deflation, which is the real potentially destructive threat.

Well obviously you didn't try and Google computer price deflation did you?:rotfl: