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| Home Front Economy |
| Deflation Has Become Inevitable |
| 2008-12-21 |
| (via London Banker blog) |
| Posted by:Anonymoose |
| #6 Well, I've learned my lesson, should have listened to the experts. I'm out of panic and now 100% myopic. |
| Posted by: .5MT 2008-12-21 22:54 |
| #5 I'm investing my money in beer and recycling the cans. |
| Posted by: DarthVader 2008-12-21 20:25 |
| #4 In reply to a commenter's question (paraphrasing), "What do you do with your money, if banks and stocks are out?" The reply was, he's spreading it around in several small banks, some in the mattress, and even some in gold. Another poster declared he was investing his in "dirt and lead". |
| Posted by: KBK 2008-12-21 18:58 |
| #3 "For one, the author proposing raising rates. We did that during a recession once and turned it into a depression." That was the last straw that triggered the perfect storm of economic conditions which resulted in the Great Depression. The same straw that Obama wishes to add again, now. Dr. White, normally I'd agree that serious deflation would be the result of all this. What may limit deflation is the fact that money will still be coming into the U.S. from foreign investment, due to the fact that despite our problems we're still a better palce to invest (and our currency will lose less value) than their own. Time will tell. |
| Posted by: no mo uro 2008-12-21 16:25 |
| #2 For one, the author proposing raising rates. We did that during a recession once and turned it into a depression. 2) He presumes that anyone 'sitting on a pile of cash' will be inclined to sit on it and not put it in a bank. I'd be more inclined to say that the 'wait and see' period for money is getting nearer to an end as we get a better idea of what's going to happen and banks look to be in less trouble. |
| Posted by: Mike N. 2008-12-21 15:34 |
| #1 Not sure I agree with the premise: yes, people with money may not be inclined to go into the markets, particularly on exotic forms of investment (e.g., derivatives, credit default swaps) but standard stocks with good P/E ratios will still attract money. Banks that are clearly solid will attract money though people will spread their bank investments. What I see happening is perhaps modest deflation for a while as we work out bad debts and commodity prices come down, but at some point people with money will invest. |
| Posted by: Steve White 2008-12-21 14:21 |