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Old 10-12-2008, 07:02 PM   #21
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Other than the words 'inflation', 'deflation' and 'fiat currency', I saw no economic content. Looked to me like an essay written by someone who didn't attend class or buy read the textbook.
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Old 10-12-2008, 08:27 PM   #22
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I was taking this topic seriously at first, but this doesn't make any sense. I could write a flowery description of a culture change due to global warming (don't need clothes anymore, can grow 3' diameter tomatoes), but that doesn't mean it's going to happen. The future is determined by actions and environment, not magazine articles. Go away.
Here is the "logic" to this depression longing. I don't like modern American culture. Depression will change it. I want it changed. I want depression. Depression is coming.

Each one of these steps is invalid, other than depression would be culture changing. But don't expect it to change anything in a way that a sane person would want.

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Old 10-12-2008, 08:34 PM   #23
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In the long-term though, that loss in spending power by the retired who are selling their stock will be offset by the increased value that the people buying the stock are getting.

Lower stock prices do not destroy wealth per se. The wealth that stocks represent is still the same-- the beneficiaries are now the buyers rather than the sellers.
It is a loss of wealth. That is why when markets rise the economy gets a boost from the wealth effect, and when markets fall, the economy drops from the wealth effect. There is also the very real loss of borrowing power which has been demonstrated by the closing of the housing ATM. Look how many people on this board are planning to cut back, and we are relatively well off. Some restaurants, retailers, etc. etc. will fail from these cutbacks. Wealth is being destroyed.

It s true that the real economy has not yet lost anything like the financial economy has, but the 30s are proof enough that there is a connection.

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Old 10-12-2008, 08:39 PM   #24
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Here is the "logic" to this depression longing. I don't like modern American culture. Depression will change it. I want it changed. I want depression. Depression is coming.

Each one of these steps is invalid, other than depression would be culture changing. But don't expect it to change anything in a way that a sane person would want.
Ha, I think you are leaving out a key element in this "logic". Modern American culture is bad/wrong. Depression will change it and will punish those who enjoyed the fruits of their evil ways.

Do I hear an "Amen!"?
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Old 10-12-2008, 08:40 PM   #25
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Isn't it a bit early to declare that "deflation is here"? Has anyone actually seen their wages go down for a few years? Where is the double-digit unemployment rate? Has anyone noticed a sustained drop in the price of goods and services lately? Besides the fall in the price of some assets, I don't see the tell tale signs of deflation right now...
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Old 10-12-2008, 11:41 PM   #26
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Isn't it a bit early to declare that "deflation is here"? Has anyone actually seen their wages go down for a few years? Where is the double-digit unemployment rate? Has anyone noticed a sustained drop in the price of goods and services lately? Besides the fall in the price of some assets, I don't see the tell tale signs of deflation right now...
In my admittedly inexpert opinion, I, for one, wouldn't be surprised to see unemployment start creeping on up towards those double digits by next year. People start buying less stuff & houses - companies cut production & layoff - builders stop building & lay off - people start buying even less.

Price deflation - hmmmm, well just thinking out loud I can see it in housing for a while till things shake out (foreclosures, bailout, etc) - but when that's done & not many new houses have been built in the interim - well, the laws of supply & demand should start to rebalance, no? (Housing could take a while though)

I can't imagine the price of lumber, nails, etc (as well as raw materials for other products) deflating much though.
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Old 10-13-2008, 12:00 AM   #27
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In my admittedly inexpert opinion, I, for one, wouldn't be surprised to see unemployment start creeping on up towards those double digits by next year. People start buying less stuff & houses - companies cut production & layoff - builders stop building & lay off - people start buying even less.

Price deflation - hmmmm, well just thinking out loud I can see it in housing for a while till things shake out (foreclosures, bailout, etc) - but when that's done & not many new houses have been built in the interim - well, the laws of supply & demand should start to rebalance, no? (Housing could take a while though)

I can't imagine the price of lumber, nails, etc (as well as raw materials for other products) deflating much though.
Your opinion is as good as mine, I am no expert either. I am just saying that as of right now, "it is a bit early to declare that deflation is here"... I can't be sure we won't have deflation down the road, but I certainly don't think it is an inevitability either...
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Old 10-13-2008, 06:03 AM   #28
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It seems to me that with massive amount of liquidity put into the system, and every government in the world running the printing presses at warp speed inflation is as least a big a worry as deflation. Massive fiscal deficits especially in the US would normally make future inflation an absolute certainity.

Now I'll admit that the collapse of credit and deleveraging has made deflation a far more plausible and scary possibility than it was a year ago when people first started discussing it. However, I still see an eventual end to the housing crisis when people terrified of the stock market, disgusted with the 2% than can earn in CD/Money Markets, decide that at least they can live in the house and it is cheaper than they were a few years ago and decide to invest in real estate/buy a house.
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Old 10-13-2008, 07:14 AM   #29
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However, I still see an eventual end to the housing crisis when people terrified of the stock market, disgusted with the 2% than can earn in CD/Money Markets, decide that at least they can live in the house and it is cheaper than they were a few years ago and decide to invest in real estate/buy a house.
Assuming they can come up with the 20% (or more) down payment likely to be required on future mortgages.
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Old 10-13-2008, 07:35 AM   #30
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Assuming they can come up with the 20% (or more) down payment likely to be required on future mortgages.
True that is big barrier but it is much easier to come up with 20% down for $300,000 house than a $500,000, and it isn't much harder than coming up with the 10% down (50K) for the 500K house.

The good news is the payments are a lot lower even the mortgage is 1/2 to 1% higher
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Old 10-13-2008, 07:49 AM   #31
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and the banks will probably look at your income to make sure you can pay the mortgage
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Old 10-13-2008, 09:00 AM   #32
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Ha, I think you are leaving out a key element in this "logic". Modern American culture is bad/wrong. Depression will change it and will punish those who enjoyed the fruits of their evil ways.

Do I hear an "Amen!"?
Maybe "ahem"...

I think a lot of folks have overly-quaint ideas about the goodle days. If everyone has to carve out an existence on their little patch of land, there'll be a bunch of starving people in no time...

Still, maybe there's a middle ground somewhere between subsistence farming and rampant, debt-fueled materialism.

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Old 10-13-2008, 12:20 PM   #33
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True that is big barrier but it is much easier to come up with 20% down for $300,000 house than a $500,000, and it isn't much harder than coming up with the 10% down (50K) for the 500K house.

The good news is the payments are a lot lower even the mortgage is 1/2 to 1% higher
I saw a bit on TV the other day that showed houses in S. Florida going for $52K, down from $275K at the peak. Just one anecdote but holy cr@p!, that's a big hair cut and I can't imagine them staying that low. And they weren't little dumpy places either; recent construction, never inhabited. Although I really don't know exactly where they were or what the area is like.
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Old 10-13-2008, 12:34 PM   #34
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I saw a bit on TV the other day that showed houses in S. Florida going for $52K, down from $275K at the peak. Just one anecdote but holy cr@p!, that's a big hair cut and I can't imagine them staying that low. And they weren't little dumpy places either; recent construction, never inhabited. Although I really don't know exactly where they were or what the area is like.
I saw the same program I think. A couple was interviewed as they walked through their new house (never been lived in) they had just purchased for $92k, down from a price near $300k. The lady couldn't stop grinning.
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Old 10-13-2008, 02:05 PM   #35
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I saw the same program I think. A couple was interviewed as they walked through their new house (never been lived in) they had just purchased for $92k, down from a price near $300k. The lady couldn't stop grinning.
That's amazing
Anybody remember what TV show that was.
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Old 10-13-2008, 02:17 PM   #36
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Florida, I think it was on either the NBC or ABC evening news.
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Old 10-13-2008, 02:22 PM   #37
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Florida, I think it was on either the NBC or ABC evening news.

Thanks, I would like to know what area that was. I will check NBC and ABC websites.
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Old 10-13-2008, 02:23 PM   #38
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Thanks, I would like to know what area that was. I will check NBC and ABC websites.
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Old 10-13-2008, 02:24 PM   #39
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