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http://blogs.telegraph.co.uk/news/danielha...eat-depression/

Some charts and commentary which wouldn't be out of place here. It's interesting to see the mainstream media getting a taster!

Maybe it is starting to dawn on some of the politicians, that there are bigger problems than just bailing out a few banks?

Trouble is , if I were a betting man I'd now bet they'd destroy the currency before allowing long term sustained deflation.

Lot's of people will end up impoverished either way.

Scenario 1: Deflation - everyone goes bust , people starve

Scenario 2: Inflation - Anyone with any cash or savings gets ripped off, buy things today or you wages will only buy half as much tomorrow. Some people sarve

Scenario 3: Hyperinflation - Injin, we're going to need a bigger printer.

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Trouble is , if I were a betting man I'd now bet they'd destroy the currency before allowing long term sustained deflation.

Lot's of people will end up impoverished either way.

Scenario 1: Deflation - everyone goes bust , people starve

Scenario 2: Inflation - Anyone with any cash or savings gets ripped off, buy things today or you wages will only buy half as much tomorrow. Some people sarve

Scenario 3: Hyperinflation - Injin, we're going to need a bigger printer.

scenario 1....why would everyone go bust? or people starve. deflation increases the value of money, there is less of it, the currency would rise imports cheaper..food therefore cheaper...bankers culled and borrowers culled.

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scenario 1....why would everyone go bust? or people starve. deflation increases the value of money, there is less of it, the currency would rise imports cheaper..food therefore cheaper...bankers culled and borrowers culled.

the powers that be have convinced people that deflation is a bad scary monster

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http://blogs.telegraph.co.uk/news/danielha...eat-depression/

Some charts and commentary which wouldn't be out of place here. It's interesting to see the mainstream media getting a taster!

Maybe it is starting to dawn on some of the politicians, that there are bigger problems than just bailing out a few banks?

Dan needs to start a campaign to end the Bank of England

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In a deflation situtaion IR will be low. The rich will not invest and choose to hang on to see what happens. Unemployment goes up and you're FUBAR.

There will be an initial frenzy of buying by consumers because they think it's great that they can have that nice 50 inch TV for £200. But once this initial period is over people hunker down to basics. This is exactly what is happening in the USA. People react far quicker over the pond because the welfare system is not as generous. We have too many sheep in this country to realise this, but the reality will bite sooner or later. Because if it doesn't then we will all be off to the other side of the pond buying house ready for the next wave up.

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Guest Steve Cook
scenario 1....why would everyone go bust? or people starve. deflation increases the value of money, there is less of it, the currency would rise imports cheaper..food therefore cheaper...bankers culled and borrowers culled.

Youve just given the biggest reason why, I'm afraid, it will not be allowed to happen,

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Trouble is , if I were a betting man I'd now bet they'd destroy the currency before allowing long term sustained deflation.

Lot's of people will end up impoverished either way.

Scenario 1: Deflation - everyone goes bust , people starve

Scenario 2: Inflation - Anyone with any cash or savings gets ripped off, buy things today or you wages will only buy half as much tomorrow. Some people sarve

Scenario 3: Hyperinflation - Injin, we're going to need a bigger printer.

Not 100% certain Scenario 1 everyone goes bust and people starve, how can those with no debts go bust? If you have no debts you can adjust accordingly and stay afloat. True most with debts go under.

Isn't Scenario 2 as you describe here hyperflation? If prices are going up that fast it's not mere inflation.

With hyperinflation nearly everyone will go bust and people starve, history confirms this is what happens.

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scenario 1....why would everyone go bust? or people starve. deflation increases the value of money, there is less of it, the currency would rise imports cheaper..food therefore cheaper...bankers culled and borrowers culled.

The tech industries have coped with deflation for decades. TV's are cheaper now than in the 1970's. Did we hold of from buying in the 70's because we knew they would be cheaper now? No.

However sectors like banking and finance I suspect won't survive deflation, hence everything but the kitchen sink being thrown at the "problem."

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Youve just given the biggest reason why, I'm afraid, it will not be allowed to happen,

If only people realised its savers being culled at the mo.

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Guest happy?
http://blogs.telegraph.co.uk/news/danielha...eat-depression/

Some charts and commentary which wouldn't be out of place here. It's interesting to see the mainstream media getting a taster!

Maybe it is starting to dawn on some of the politicians, that there are bigger problems than just bailing out a few banks?

Oh dear, mad-as-a-hatter Hannan at it again. I'll give him another year in the Tory party - two at most.

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scenario 1....why would everyone go bust? or people starve. deflation increases the value of money, there is less of it, the currency would rise imports cheaper..food therefore cheaper...bankers culled and borrowers culled.

Borrowers appear to make up the majority of the UK population, and servicing debts would become more difficult if you are being paid less...

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Borrowers appear to make up the majority of the UK population, and servicing debts would become more difficult if you are being paid less...

and yet....nearly half of all house sales recently are cash buyers...

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Guest happy?
and yet....nearly half of all house sales recently are cash buyers...

And the auctioneers are singing a happy song - Allsops have reported a vrey good year.

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Guest anorthosite

I can't believe that was written by Daniel Hannon, it doesn't quote Shakespeare anywhere :o

Still, its nice to have yet another politician speaking up after all the damage has been done. Where was he before the credit crunch?

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I can't believe that was written by Daniel Hannon, it doesn't quote Shakespeare anywhere :o

Still, its nice to have yet another politician speaking up after all the damage has been done. Where was he before the credit crunch?

In brussels taking backhanders in private and then moaning about corruption in public, no?

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Guest anorthosite
Watching elected politicians attempting to be uber-bears is like watching your dad disco-dancing.

"What's this Baltic Dry Index thing then, Daddio?"

You should put that in your signature!

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scenario 1....why would everyone go bust? or people starve. deflation increases the value of money, there is less of it, the currency would rise imports cheaper..food therefore cheaper...bankers culled and borrowers culled.

why would everyone go bust?

Everyone wouldn't go bust but those with debt (and that's a lot of people) would find the debt burden rise to unmanageable levels and many would go bust.

Those with cash or near cah assets would do well but lots would still need work and this may not be easy.

Edited by WiseBear

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Deflation is bad in a fiat money system.

Inflation encourages investment. If you invest money into an asset, but made a bad choice, inflation rescues ones from their bad investment.

A deflationary spiral with no perceived end discourages investment as there is no safety net of inflation. Why should I invest in property if I know it will be cheaper tomorrow, and the day after that? And rents also fall in tandem.

Businesses will go bust s credit lines will be withdrawn, as loans secured on assets fall into deep into negative equity.

One may feel wealthy with cash pile in a deflation short term, but it may not of any use if there are no food on the shelves or fuel in gas stations or job to go to for further cash.

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Deflation is bad in a fiat money system.

Inflation encourages investment. If you invest money into an asset, but made a bad choice, inflation rescues ones from their bad investment.

A deflationary spiral with no perceived end discourages investment as there is no safety net of inflation. Why should I invest in property if I know it will be cheaper tomorrow, and the day after that? And rents also fall in tandem.

Businesses will go bust s credit lines will be withdrawn, as loans secured on assets fall into deep into negative equity.

One may feel wealthy with cash pile in a deflation short term, but it may not of any use if there are no food on the shelves or fuel in gas stations or job to go to for further cash.

Errrrr so no investment should ever fail? :lol:

You can't have universal one way no loss bets.

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why would everyone go bust?

Everyone wouldn't go bust but those with debt (and that's a lot of people) would find the debt burden rise to unmanageable levels and many would go bust.

What would happen their creditors, i.e. to savers relying on borrowers meeting their obligations?

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why would everyone go bust?

Everyone wouldn't go bust but those with debt (and that's a lot of people) would find the debt burden rise to unmanageable levels and many would go bust.

Those with cash or near cah assets would do well but lots would still need work and this may not be easy.

thats the purpose of a BUST phase...to clear out poor investment, which fueled the BOOM...trying to keep the BOOM going is an impossibility....unless one sees hyperinflation as a cure.

Governments and people need to learn that we cant ALL be winners. what they are doing now is teaching banking losers that they are in fact winners after all....they will have learned nothing and will crash it all again...

Of course, to say the BUST has a purpose assumes it has some reactionery need to come about. It however has no organic purpose...it is just a mechanical reaction to a mechanical imbalance...like water, the economy has waves but the level remains the same overall.

Edited by Bloo Loo

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Errrrr so no investment should ever fail? :lol:

You can't have universal one way no loss bets.

You can in a long-term deflationary environment: just hold money and enjoy the free yield. Compare with the nominal value of capital investment (and the production generated) that falls each year as the purchasing power of money rises.

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