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Deflation Fears


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HOLA441

Deflation fears

Slip ... pay growth is slowing

WAGE growth is slowing - sparking fears of deflation.

Official figures yesterday showed wages were just one per cent higher in July than in the same month last year.

This compared with a 1.9 per cent figure for June and more than three per cent for most of 2008, the Office for National Statistics said.

Economists predict rises will shrink further and could become pay CUTS as employers battle the recession.

Vicky Redwood, of Capital Economics, said: "This slowdown in pay growth highlights clearly why the risk of deflation is alive and well."

The data also showed a pay gap between public and private sector workers.

Those in the public sector are still enjoying decent rises of 2.5 per cent, against 0.6 per cent deals in private firms.

http://www.thesun.co.uk/sol/homepage/news/...iness-news.html

Deflation is still in the news,

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HOLA443
Deflation fears

Slip ... pay growth is slowing

WAGE growth is slowing - sparking fears of deflation.

Official figures yesterday showed wages were just one per cent higher in July than in the same month last year.

This compared with a 1.9 per cent figure for June and more than three per cent for most of 2008, the Office for National Statistics said.

Economists predict rises will shrink further and could become pay CUTS as employers battle the recession.

Vicky Redwood, of Capital Economics, said: "This slowdown in pay growth highlights clearly why the risk of deflation is alive and well."

The data also showed a pay gap between public and private sector workers.

Those in the public sector are still enjoying decent rises of 2.5 per cent, against 0.6 per cent deals in private firms.

http://www.thesun.co.uk/sol/homepage/news/...iness-news.html

Deflation is still in the news,

Course it is - inflation works best if people hold cash.

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HOLA446
Which is why too many are attached to it as an outcome.

The government is going to print and print and steal your savings in order to bail it's various constituencies out.

THis may be their cunning plan but they will meet market resistance: Sterling, borrowing rates (if our bonds are downgraded) and social upheaval: when people are robbed of the value of their money they rebel. In a deflation scenario all is calm...depressing maybe, but calm.

When a $9.4TR bubble deflates it carries with it a lot of deflationary momentum in the form of job losses, downward spiral in wages and price of goods.

(that freakin go compare is looming large on my screen as I accidentlaly stepped inot its box with my mouse and there is no way to X it out)

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(that freakin go compare is looming large on my screen as I accidentlaly stepped inot its box with my mouse and there is no way to X it out)

I hate it too..but, top left hand corner of the ad, you can click on "close"..it's very faint, but it's there ;)

Edited by acer
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HOLA4410
Deflation fears

Slip ... pay growth is slowing

WAGE growth is slowing - sparking fears of deflation.

Official figures yesterday showed wages were just one per cent higher in July than in the same month last year.

This compared with a 1.9 per cent figure for June and more than three per cent for most of 2008, the Office for National Statistics said.

Economists predict rises will shrink further and could become pay CUTS as employers battle the recession.

Vicky Redwood, of Capital Economics, said: "This slowdown in pay growth highlights clearly why the risk of deflation is alive and well."

The data also showed a pay gap between public and private sector workers.

Those in the public sector are still enjoying decent rises of 2.5 per cent, against 0.6 per cent deals in private firms.

http://www.thesun.co.uk/sol/homepage/news/...iness-news.html

Deflation is still in the news,

Wages *rises* might be slipping in the UK at, so what we're not the driving force in a world economy. With that in mind we can easily avoid deflation and IMO we will do by oversteering not to hyperinflation, but to annoyingflation ( the level where it starts to annoy people). In isolation a country can deflate if the world prints cash, its going one way and one way only.

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Which is why too many are attached to it as an outcome.

The government is going to print and print and steal your savings in order to bail it's various constituencies out.

If they enable Public sector pay freezes and freeze benefits and houseing benefits using falling RPI and CPI as a reason won't the goverment be better off without printing.!

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If they enable Public sector pay freezes and freeze benefits and houseing benefits using falling RPI and CPI as a reason won't the goverment be better off without printing.!

I don't think they'll find a few trillion quid by nickel and diming school cleaners, somehow.

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Guest Steve Cook
I don't think they'll find a few trillion quid by nickel and diming school cleaners, somehow.

I am inclined towards the inflationary outcome.

Loads-a-money is printed up/created electronically by the CBs

This will produce monetary-inflationary-driven price rises unless:

1) the money is sucked back out from elsewhere in the economy in the form of higher taxes/cuts in public services and is then "destroyed" by the CBs. This would have the effect of rebalancing the overall money supply.

2) There is sufficient growth in the economy to be able to give all of the new money a new home to go to. This will have the effect of causing the ratio of money to the economic need fro it to come back into balance.

Number (1) is only going to be partially successful. this is because there will be so much that needs to be sucked back out of the economy to bring the money supply back into balance, that if the government were to try and do it over a relatively short time frame there would be civil unrest.

Number (2) is not going to happen because as soon as we try to grow our economies significantly again, we are going to run into the same resource supply constraints (in particular, energy) that is the primary underlying reason for this crisis in the first place.

My guess is that the governments will attempt to hold a middle ground whereby they suck some money back in and hope for some limited growth. The thing is that growth is simply not going to happen.

The only outcome is massive price rises in goods and services. These price rises will be driven from both the supply and demand ends of the equation simultaneously. Firstly, as a result of monetary inflation. Secondly, as a result of actual, real-world deflation of raw resources.

We are between a rock and a hard place.

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We certainly are Steve. Whilst inflation is the plan, the only plan, the sheer magnitude of the shadow banking system means that we will have deflation for a while to come. Not that the price of commodities is likely to reduce.

Whatever the timescale we are ensured volatility from here on in. I expect that the banking sector will basically suck all the life out of the real economy such that we have trouble feeding ourselves.

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THis may be their cunning plan but they will meet market resistance: Sterling, borrowing rates (if our bonds are downgraded) and social upheaval: when people are robbed of the value of their money they rebel. In a deflation scenario all is calm...depressing maybe, but calm.

When a $9.4TR bubble deflates it carries with it a lot of deflationary momentum in the form of job losses, downward spiral in wages and price of goods.

(that freakin go compare is looming large on my screen as I accidentlaly stepped inot its box with my mouse and there is no way to X it out)

Use Firefox and install the script blocker.

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