Recently there has been talk in the media about the dangers of deflation in the coming environment. But the electronics and computer industry have been facing deflationary pressures since its inception.
What should the correct level of inflation/deflation. I always assumed a 1-2% inflation rate would be best. But in fact is a very difficult topic. Money is in essence a substitute for work. We exchange our labor for money. Is the value of the labor of the person making your sandwich worth any more yesterday, today, or tomorrow. In some sense the value disappears once the sandwich is eaten. But what is the value of the laborer who built the Roman roads and bridges that last a thousand years?
The news media says the problem with deflation is that it causes people to delay purchases because they can a better deal later on. Eventually causing a slow down of the economy as more and more people delay purchasing things. But the computer industry has faced this pressure, as each year newer items are both better and cheaper. The news media forgets that there is a utility in possessing an object now. The question for the consumer is the utility of possessing the object now worth the possible savings that can be achieved in future.
Of course the savings of a deflationary environment for the consumer may be offset by the lost of wages by the worker and the lost of interest revenue by the saver. Deflation favors the worker who saves in the past, inflation favors the worker of the future.
Thursday, December 18, 2008
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5 comments:
It seems to me we'd all be much better off in the USA if the Government, in theory the people in a democracy, controlled the printing of money, rather than private banks (the federal reserve is a private bank). Our founding fathers, Lincoln, Jackson and Kennedy all said as much. JP Morgan said something like I care not who is controlling government as long as I control the money supply...and he was spot on!
I believe in free enterprise and that creators of new technologies and the founders of companies should get everything they want, but CEOs and top executives should not make all that much more than the workers, they are all living off of the inventor's invention or the founder's risk taking just like the workers. Executives should get paid a little more than workers for the time they put in to get a good education but not that much more...something like 10 maybe 20 times as much as the average worker but not 10000 times as much as is the case often... nobody is worth that much more than the average worker, nobody. That is corruption pure and simple, not free market like they fool you into believing but corruption!
In order for government to be a watchdog on corporate corruption it is important that the people keep Republicans out of power, otherwise they will give away the store while bombing third world children on the way for more sick profit.
The problem is not deflation or inflation but quality...our food has become poison, our toys toxic, our transportation and energy toxic, our media propaganda, mainstream education worthless ...everything is geared to further enrich the elites when Republicans rule...I can't wait to see the difference under Obama, the only reason the Dow is not below 2000 today is because Obama won, though Bush has one month left to do the most damage possible and believe me he does not waste a day in bailing out more of his corrupt crony friends!
Deflation, Inflation both are good and bad and are effects not causes....we need not worry about it, they are effects not causes... we need stability and quality and super high environmental and health standards, that's what makes for a strong economy and safe smart consumption! All GMO foods should be clearly labeled they are not, coal plants are poisoning our fish and plants with mercury, yet we still haven't replaced them with wind and solar, ....GM, Ford...make super efficient cars for Europe and China but not for the USA, Toyota imports most of its cars for sales in the USA even though they have manufacturing plants here, etc etc...
Don't worry about inflation or deflation worry about mercury in your fish, if you do that everything will be fine! Worry that Republican lobbyists don't head up the watch dog dept's like the FDA, EPA, SEC, etc... Buy only organic and locally grown when possible, both meat and vegetables...demand labeling of GM foods so we have a choice instead of having these dangerous foods shoved down our throats!!
How come you can never stay on topic? There is a entry for food, put your comments on food there.
Feeling a little crabby today, Joe?
calin
"The question for the consumer is the utility of possessing the object now worth the possible savings that can be achieved in future."
A lot of that depends on the immediate "need" of that object. Does the old one still work? Will the new one be cheaper to operate thus paying for itself? Too many variables there to be answered simply.
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