[anarky321]

just thought id post this here...reading that article brings up memories of how i was ridiculed here a few months ago for suggesting that we would be in a deflationary spiral in a few months

most people seemed to be on the 'inflationary' side of the argument back then

http://www.marketwatch.com/news/story/D ... 8BF4777%7D

[smallpoxgirl]

I'm still not convinced this won't eventually evolve into inflation, but Ive got to give credit to you guys that were predicting deflation. I sure didn't see it coming.

[Rubin_Flagg]

I love honest discussions and especially honest people who admit they made a mistake. They are worth more than gold.

Smallpoxgirl...you have my eternal respect.

I see inflation in about two years..after we have hit bottom.

Rubin.

[Armageddon]

I'm still not convinced this won't eventually evolve into inflation, but Ive got to give credit to you guys that were predicting deflation. I sure didn't see it coming.

In a major recession when demand for most things drop off a cliff, isn't deflation inevitable ? But the kicker is, the definition of inflation is the influx of money into the monetary system ( printing ), which devalues the dollar and causes the rise in price in goods and services ( they don't actual rise, it just takes more devalued dollars to buy the same items ) . They have been running the printing presses 24/7 so inflation should be what is happening.

[DJSNOLA]

Its not inflation because the banks are not lending the money out, they are hoarding it. Once they begin lending it out inflation may be what happens. However, in the meantime I dont see much desire on the part of banks to lend money. Who really wants to expand their business, or buy a new home. Sure there are a few folks, but nothing on the scale that would be required to create an inflationary environment. Also, as much money as we have printed, it still is less then the wealth that has evaporated. Ill stay on the deflationary side for the time being, but do believe stagflation could be the end result.

[Armageddon]

Its not inflation because the banks are not lending the money out, they are hoarding it. Once they begin lending it out inflation may be what happens. However, in the meantime I dont see much desire on the part of banks to lend money. Who really wants to expand their business, or buy a new home. Sure there are a few folks, but nothing on the scale that would be required to create an inflationary environment. Also, as much money as we have printed, it still is less then the wealth that has evaporated. Ill stay on the deflationary side for the time being, but do believe stagflation could be the end result.

Good point. This would explain deflation too.

[StormBringer]

Question: does the devalue of the dollar actually help the national debt? The debt is base on the dollar right? Or can someone explain?

[DrBang]

I must admit I did not see the deflation scenario. Stagflation I thought was possible. I also think that once we pass a certain point hyperinflation is the thing.

Then I am thinking we will have a completely new system of economics.

Kind Regards

Dr Bang

[DJSNOLA]

Yes, I think what makes this so dificult to forecast is that everything seems to be happening so quickly. Its very difficult to say with any certainty what will happen in a few days, let alone a few months. However, there is no inflation at the current time. Surely, prices will inflate at some future point,but who knows when that it is!

[oxj]

Darn it! I was hoping my student loans could be paid back with toilet paper.

[notill]

Demand destruction has been the catch word in this cycle but I'm afraid supply destruction will be the result. The classic example being oil, how much new capacity is coming on line at $45 per barrel? The same can be said for many commodities.

Many consumers can't afford $100 oil, but shortly many producers won't be able to produce for less than $100. Two immovable forces will collide.

Economic activity is what will be taxed to support this faltering system, but as that burden becomes ever greater, more marginally producing oil fields will not be developed, (or farms or mines or forests) or will be abandoned for lack of profitability.

[anarky321]

cant afford $100 oil? guess again

oil is an inelastic good with few to no substitutes, moreover happens to be very fuel of civilization

the current plunge in oil prices will be corrected momentarily by supply cuts and the realisation that energy use isnt going to plunge no matter how bad the economy gets

oil will be back to $100 and above before you know it

but you are correct in that this is going to hurt new production going online...its quite ironic really here we are fretting over the greatest energy resource in history running out and it just plunged in price by 3x...they're going to read about this in the history books

energy is the only true wealth everything else is just a transfer

[mgibbons19]

I don't think any of us know what's going to happen.

[Sixstrings]

Surely, prices will inflate at some future point,but who knows when that it is!

Well, you know what they said in the Depression. A stead dinner cost a dollar, but you didn't have a dollar.

[GoghGoner]

I don't think any of us know what's going to happen.

That's for sure. I remember many analysts fearing inflation and berating the Fed for cutting rates last year. Although, I don't know anything about economics their reasoning made sense from the oil-tinted glasses I was wearing. Now, we are in a downward deflationary spiral. I still think energy prices will have to go up pretty quickly and cause costs to start increasing unless unemployment continues to increase and blow past 15%.

[MrMambo]

It will be interesting to see if close to zero interest rates will restart the warm buzz of inflation and stop this horrible deflation.

Maybe the last part of x-mas season will once more bring back the lovely mindless consumption to save us all from having rethinking the economic system.

[InToWishin]

I'm gonna' get me a full-length mink for $10 just so I have it to drag it on the floor.