Deflation

Bantex_2

N1AK wrote: »

Your money is also worth less year after year (as long as there's deflation...)

Are you sure?

Jonbvn

N1AK wrote: »

Your money is also worth less year after year (as long as there's deflation...)

I take it this is tongue in cheek??

lalman

Deflation doesn't necessarily mean a deflation in wages does it? Our incomes will effectively go up instead of getting eroded by inflation like they are now...

So, the best strategy is to pay off mortgages as the real value will go up if/ when we have deflation? or will it be flat as our wages are 'frozen'....

Bantex_2

I would suggest that deflation would have winners and losers as also happens with inflation.

In the great recession in the 30s, those in work in the south of England saw their living standards greatly improved due to deflation.

Masomnia

Bantex wrote: »

That is the bit I have a problem with.
Most electronic and tech goods are getting cheaper all the time and have been doing so for years, same with cars and many other goods, yet people go on buying them and replacing with the latest model despite knowing they willl be chaeper next year.

Mmm but there's so much improvement in technology that people will upgrade anyway. If a laptop that's twice as fast comes out next year I'll still want to upgrade sooner to take advantage of faster processors etc. Otherwise we'd still all have cathode ray tube TVs.

Bantex_2

Masomnia wrote: »

Mmm but there's so much improvement in technology that people will upgrade anyway. If a laptop that's twice as fast comes out next year I'll still want to upgrade sooner to take advantage of faster processors etc. Otherwise we'd still all have cathode ray tube TVs.

So in your case, deflation would not lead you to put off purchasing.

Masomnia

Bantex wrote: »

So in your case, deflation would not lead you to put off purchasing.

In some cases no it wouldn't. But inflation/deflation is about the general level of prices, rather than about one or two items. At least that's my understanding.

Bantex_2

:j

Masomnia wrote: »

In some cases no it wouldn't. But inflation/deflation is about the general level of prices, rather than about one or two items. At least that's my understanding.

What type of goods would you hold off on for lower prices?

I believe society has changed a lot since many of teh economics text books were written.

Today is all about instant gratification.

wotsthat

Bantex wrote: »

:j
What type of goods would you hold off on for lower prices?

Those which are improving more slowly than the rate of deflation. If I buy a new car today that would be £1000 less next year it needs to provide additional utility in excess of £1000.

Bantex wrote: »

I believe society has changed a lot since many of teh economics text books were written.

Today is all about instant gratification.

The only thing different than when economists were first pondering behaviour is we're wealthier so many more people can afford instant gratification.

IronWolf

Masomnia wrote: »

Mmm but there's so much improvement in technology that people will upgrade anyway. If a laptop that's twice as fast comes out next year I'll still want to upgrade sooner to take advantage of faster processors etc. Otherwise we'd still all have cathode ray tube TVs.

What big areas outside of electronics are there that are discretionary spending?

I can't see my gf putting off buying a new pair of shoes til next year just because they might be 1% cheaper.