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Old 08-06-2010, 02:50 PM   #21
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Yes, I admit I have been hoping for deflation. Not the economic slowdown part of it, but definitely the lower prices. I'm tired of hearing there is no inflation, when so much of the stuff I buy has been going way up in price. (Beer, tuna, junk food, meat, motor oil, auto parts, clothes, etc, etc, etc)
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Old 08-06-2010, 02:55 PM   #22
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Originally Posted by John Galt III View Post
I'm tired of hearing there is no inflation, when so much of the stuff I buy has been going way up in price. (Beer, tuna, junk food, meat, motor oil, auto parts, clothes, etc, etc, etc)
I think it's pretty obvious that there are two inflation rates: one for the necessities of life and one for discretionary "stuff." They may cancel each other out in an overall zeroish inflation rate, but the person who buys only the "necessities" is not likely to agree with the "no inflation" argument, let alone that there is deflation in anything other than their income.
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Old 08-06-2010, 03:16 PM   #23
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I have rental income so that would be a good thing if deflation happens. While I'd far rather see a strong economy, the reality is that I have to be prepared for the other possible scenarios as I'm hoping to ER in a year or so.

Naw deflation is bad for real estate owner, since a large part of the appeal of real estate is future price appreciation of the unit. This is a especially true if you have a mortgage.

The situation changes if you own the properties free and clear but even then prolonged deflation is bad. We have already seen rents drop as housing prices have dropped. If the value of house or condo drops from 500K to 250K the rent may not drop in 1/2 but it will drop a lot.
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Old 08-06-2010, 04:42 PM   #24
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Can someone explain to me that Japan has experienced no inflation for like 18 years, and yet, the unemployment rate there is still very low (I think it's 4% or something)? Are the numbers rigged or something??

My mom is one of those "elderlies" in Japan and she loves the fact that the prices have been staying pretty much the same since she retired at age 72 10 years ago.

Increase of the elderlies living at the proverty level may have something to do with the breakdown of the core family unit.

Anyway, my mom knows someone who only gets about $500/mo (or was it $550/mo?) from his SS and he was accepted into a special care facility out of the city because he can no longer take care of himself (and his income more than qualifies him for the service.)

It doesn't sound that bad to me, but what do I know...
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Old 08-06-2010, 05:04 PM   #25
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I would actually prefer inflation to pick up a little to around 4% to help inflate away some of my debt. And then drop back in the 2-3% range once my debt is paid!
Is that you "helicopter" Ben?
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Old 08-06-2010, 05:54 PM   #26
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When it gets that bad I think some people will be better off than others. But it will be like someone who is genetically unable to get the disease that is killing off almost everyone around. You may live, but in what kind of world will you live?


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Old 08-06-2010, 06:12 PM   #27
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Can someone explain to me that Japan has experienced no inflation for like 18 years, and yet, the unemployment rate there is still very low (I think it's 4% or something)? Are the numbers rigged or something??

My mom is one of those "elderlies" in Japan and she loves the fact that the prices have been staying pretty much the same since she retired at age 72 10 years ago.

Increase of the elderlies living at the proverty level may have something to do with the breakdown of the core family unit.

Anyway, my mom knows someone who only gets about $500/mo (or was it $550/mo?) from his SS and he was accepted into a special care facility out of the city because he can no longer take care of himself (and his income more than qualifies him for the service.)

It doesn't sound that bad to me, but what do I know...
Japan has suffered deflation for almost 2 decades. The population is aging and declining, and spending less. What has kept business solvent and saved them from real hardship is exports, primarily to the US.

Deflation in the US is bad for the US because there are no consumers anywhere else to keep business volumes up. It is also bad for the global exporters for the same reason. Especially Asia, followed by resource exporters.

While I do not believe US or US/global deflation is likely, the impact is serious enough to have a little insurance.
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Old 08-06-2010, 07:37 PM   #28
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That 3% inflation multiplier in ER projections is a real bummer. I have 50% of my investments in high grade corporate and government bonds and a 3 years cash bucket, so should I be hoping to retire into a period of deflation?
Like the universe cares what we might hope for.

oris Day - Que Sera Sera‬‎
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Old 08-06-2010, 07:42 PM   #29
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Like the universe cares what we might hope for.
Thanks, we all need to be remembered of that every now and then.
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