Comments on: Why is Moderate Inflation Desirable? http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/ Saving, Earning, and Investing Money Sat, 21 Nov 2009 14:52:35 -0800 http://wordpress.org/?v=2.8.5 hourly 1 By: Michael http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125908 Michael Fri, 13 Feb 2009 19:55:54 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125908 A healthy economy doesn't do what our economy is doing right now. In a healthy economy, people and companies produce and save money in order to invest in their future. The biggest trends in our country are borrowing and spending. Over 70% of our GDP is consumption. This is not healthy nor is it sustainable over time. We need this recession/depression in order to correct this. That is what a recession is. When the economy becomes out of balance due to a huge bubble or boom, a recession is the cure to the problem. Most people think that a recession is the problem when it is really the solution to an economy that has become unbalanced. Our government is trying to avoid this recession by inflating their way out of it and create demand that isn't there. John Maynard Keynes and his theories are far more destructive to our country than any terrorist. My grandparents raised 6 children in a middle class town on one professional income. It took two professional incomes to raise my brother and I in a similar town. That is the result of inflation. Our average standard of living will continue to go down as long as inflation is a standard part of government monetary policy. A healthy economy doesn’t do what our economy is doing right now. In a healthy economy, people and companies produce and save money in order to invest in their future. The biggest trends in our country are borrowing and spending. Over 70% of our GDP is consumption. This is not healthy nor is it sustainable over time. We need this recession/depression in order to correct this. That is what a recession is. When the economy becomes out of balance due to a huge bubble or boom, a recession is the cure to the problem. Most people think that a recession is the problem when it is really the solution to an economy that has become unbalanced. Our government is trying to avoid this recession by inflating their way out of it and create demand that isn’t there.

John Maynard Keynes and his theories are far more destructive to our country than any terrorist. My grandparents raised 6 children in a middle class town on one professional income. It took two professional incomes to raise my brother and I in a similar town. That is the result of inflation. Our average standard of living will continue to go down as long as inflation is a standard part of government monetary policy.

]]> By: Manshu http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125512 Manshu Sat, 07 Feb 2009 16:26:16 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125512 @Michael: Thanks for bringing up the opposing point of view. People who are interested in exploring Michael's point further should especially look at what Mitlon Friedman has to say. He is another great economist who reinterpreted the Keynesian way, so reading his works will be great. Do a search for Peter Schiff on YouTube and you will get a lot more info on how assets have moved with respect to Gold prices, and that will also help explore this point further. His views on inflation are also similar to Michael's so that will be good too. It is always good to be aware of both sides of an argument. @Richer and Slimmer: I agree with you that Inflation is better than Deflation. I guess I will continue to hold that view unless the world sees an Inflationary Great Depression. @Kosmo: Zimbabwe has just issued a 100 billion dollar note and you too can get it on eBay :) @Michael: Thanks for bringing up the opposing point of view. People who are interested in exploring Michael’s point further should especially look at what Mitlon Friedman has to say. He is another great economist who reinterpreted the Keynesian way, so reading his works will be great.
Do a search for Peter Schiff on YouTube and you will get a lot more info on how assets have moved with respect to Gold prices, and that will also help explore this point further. His views on inflation are also similar to Michael’s so that will be good too.

It is always good to be aware of both sides of an argument.

@Richer and Slimmer: I agree with you that Inflation is better than Deflation. I guess I will continue to hold that view unless the world sees an Inflationary Great Depression.

@Kosmo: Zimbabwe has just issued a 100 billion dollar note and you too can get it on eBay :)

]]> By: Richer and Slimmer http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125481 Richer and Slimmer Sat, 07 Feb 2009 05:00:44 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125481 Inflation is better than deflation for a healthy economy. Suppose a country has is in deflation. That means prices drop with time. Therefore, there is an incentive for people to wait before they buy because the longer they wait, the less their desired items price will be. Thus people hold on to their money instead of spending it, making the economy slow down. Thanks, www.richerandslimmer.com Inflation is better than deflation for a healthy economy. Suppose a country has is in deflation. That means prices drop with time. Therefore, there is an incentive for people to wait before they buy because the longer they wait, the less their desired items price will be. Thus people hold on to their money instead of spending it, making the economy slow down.

Thanks,
http://www.richerandslimmer.com

]]> By: Michael http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125480 Michael Sat, 07 Feb 2009 04:49:42 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125480 It doesn't matter how you try and sell it, inflation is a terrible thing. We are being lied to about the level of inflation that we are facing. In the 70s the CPI was calculated using a fixed group of products. Now there are many products that can be tested and the products chosen from year to year can change. Check out the website shadowstats.com for an alternate look at inflation numbers. Remember, the only reason it looked like we had a huge stock rally from 03-07 was because we were looking at the numbers in dollars. Priced in gold the dow has gone down every year since 2003. You may claim that gold is just in a big bull market, but gold doesn't really move in value, only the currencies that it is priced in move. In the 1920s you could buy a decent suit for one ounce of gold, the same is true today. In the 70s when inflation was moderate to high the dow went down to one ounce of gold in price. We are going down that path once again by following the advice of Keynesians like OneMint. Can you imagine the dow and gold meeting at 4000? You can't inflate your way out of problems. All you can do is put off the pain until a later date. It doesn’t matter how you try and sell it, inflation is a terrible thing. We are being lied to about the level of inflation that we are facing. In the 70s the CPI was calculated using a fixed group of products. Now there are many products that can be tested and the products chosen from year to year can change. Check out the website shadowstats.com for an alternate look at inflation numbers.

Remember, the only reason it looked like we had a huge stock rally from 03-07 was because we were looking at the numbers in dollars. Priced in gold the dow has gone down every year since 2003. You may claim that gold is just in a big bull market, but gold doesn’t really move in value, only the currencies that it is priced in move. In the 1920s you could buy a decent suit for one ounce of gold, the same is true today.

In the 70s when inflation was moderate to high the dow went down to one ounce of gold in price. We are going down that path once again by following the advice of Keynesians like OneMint. Can you imagine the dow and gold meeting at 4000?

You can’t inflate your way out of problems. All you can do is put off the pain until a later date.

]]> By: Brad http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125461 Brad Fri, 06 Feb 2009 23:52:08 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125461 How about no inflation? Realize that inflation causes you to lose money as you are taxed on things that "gain" on paper, yet didn't really increase in value. Just because the pay cut is not obvious doesn't mean it isn't there. The employee is still 2% behind where they were, in your example. Brad How about no inflation? Realize that inflation causes you to lose money as you are taxed on things that “gain” on paper, yet didn’t really increase in value. Just because the pay cut is not obvious doesn’t mean it isn’t there. The employee is still 2% behind where they were, in your example.

Brad

]]> By: kosmo http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125446 kosmo Fri, 06 Feb 2009 19:35:07 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125446 I've seen news stories listing Zimbabwe's inflation at above 200 million percent. In other words, $2 million of purchasing power on Jan 1, and $2 of purchasing power on Dec 31. It would make no sense for shopkeepers to accept ZIM $. It would be impossible to set prices. I’ve seen news stories listing Zimbabwe’s inflation at above 200 million percent. In other words, $2 million of purchasing power on Jan 1, and $2 of purchasing power on Dec 31.

It would make no sense for shopkeepers to accept ZIM $. It would be impossible to set prices.

]]> By: Manshu http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125440 Manshu Fri, 06 Feb 2009 16:29:33 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125440 Thanks for the kind words - Trevor and Ancella. And a big thanks to Lazy Man for letting OneMint appear on his great website! Thanks for the kind words – Trevor and Ancella. And a big thanks to Lazy Man for letting OneMint appear on his great website!

]]> By: Ancella http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125439 Ancella Fri, 06 Feb 2009 16:25:51 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125439 This article is good "food for thought".... Another example of hyperinflation is that of the Zimbabwaen Dollar. The official inflation rate has shot thru the roof @ 66212.3% with an exchange value of some 7.1million Z$ to 1USD. Businesses in Zimbabwe have now resorted to accepting only "foreign" currency for trading, etc. This article is good “food for thought”….

Another example of hyperinflation is that of the Zimbabwaen Dollar. The official inflation rate has shot thru the roof @ 66212.3% with an exchange value of some 7.1million Z$ to 1USD. Businesses in Zimbabwe have now resorted to accepting only “foreign” currency for trading, etc.

]]> By: Trevor - 14 Year Old Blogger http://www.lazymanandmoney.com/why-is-moderate-inflation-desirable/comment-page-1/#comment-125434 Trevor - 14 Year Old Blogger Fri, 06 Feb 2009 13:59:55 +0000 http://www.lazymanandmoney.com/?p=1572#comment-125434 Good Article. This is something to think about. Good Article.

This is something to think about.

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