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The Nagging Fear That Qe Itself May Be Causing Deflation


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HOLA441
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HOLA442

Claudio Borio, the BIS's chief economist, says this refusal to let the business cycle run its course and to purge bad debts is corrosive. The habit of turning on the liquidity spigot at the first hint of trouble leads to "time inconsistency". It steals growth and prosperity from the future, and pulls the interest rate structure far below its (Wicksellian) natural rate. "The risk is that the global economy may be in a deceptively stable disequilibrium," he said.

Well the HTB newbuild buyers are likely to have less to spend in the economy going forwards, paying very high prices. Now they've bought newbuilds, they're a lot less likely to be bidding against me on secondary supply that comes to market, so sellers have less proceedable demand to sell to. Same for HTB2ers, paying high prices, less to spend in the economy proper. If we get our crash.

Mewers and Bomaders too, and all those chasing yield at high prices. And some signs people spending down their savings, even from cash ISAs. "Sky News revealed that the overall outflow of savings deposits from all long-term accounts was the greatest and fastest in recent economic history."

In the old days less in savings meant less banks could lend out, and now new rules heading back more towards that. I've got to believe the market has reacted giddily, as market participants make ill-informed decisions, whereas the banks and other smarter interests are patient, and wait.

5 November 2013
A new survey of family offices by Citi finds that the wealthy are cash heavy—meaning they may fall short of the investment returns they’re expecting. Wealthy families have about 39 percent of their assets in cash, according to a recent poll of more than 50 large family office representatives from 20 countries conducted by Citi Private Bank.
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HOLA443

So we have a largely privately controlled financial system that requires scarcity as a driver of the profitability required to repay the credit upon which it feeds- combined with a technology that threatens to undermine that scarcity by making production ever cheaper and more efficient.

So the dream of capitalism- abundance for all- and the needs of those who finance this dream seem fundamentally opposed- deflation while good for the 'consumer' is bad for the bankers, whose debt won't get repaid in a deflationary world.

Which does imply that the system as currently set up genuinely cannot process the kind of technological progress we are told will be the key to our future well being.

It seems progress itself is now a genuine threat to our future :blink: ?

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HOLA444

So we have a largely privately controlled financial system that requires scarcity as a driver of the profitability required to repay the credit upon which it feeds- combined with a technology that threatens to undermine that scarcity by making production ever cheaper and more efficient.

So the dream of capitalism- abundance for all- and the needs of those who finance this dream seem fundamentally opposed- deflation while good for the 'consumer' is bad for the bankers, whose debt won't get repaid in a deflationary world.

Which does imply that the system as currently set up genuinely cannot process the kind of technological progress we are told will be the key to our future well being.

It seems progress itself is now a genuine threat to our future :blink: ?

War, huh, what is it good for........

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HOLA445

Waiting since the 2008 crash and still no deflation. Asset prices pretty much back to where they were around the peak and all the basics of life are a lot more expensive now, than then.

It's almost as if you can avert deflation by simply printing money and dumping it into the markets. Whoever would have thought such a thing was possible?

The trick is being able to re-inflate the economy in an orderly and sustainable fashion. Every time the economy blows up the cost of repairing it impacts negatively on the living standards of the majority.

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HOLA446

Here's a little bit, but pennies and pounds cut from some clothes and stuff not too relevant to me - even if I'm not adding anything to the gardening/diy spend anyway. I still hold asset prices will follow.

Keynes' magical insight was to realise that the behaviour of capitalist economies is characterised by the movement of two sets of relative prices - current output and capital assets - operating over radically different timeframes. The alignment of these two sets of prices imposes constraints upon the current functioning of the economy and conditions its future behaviour. Put simply, recovery is impossible sustainably without the two being brought back into equilibrium. Either asset prices fall sharply or current prices must soar (or some combination of both). But the inflationary impact of soaring current output on govt gilt yields would have disastrous consequences for the national debt, as debt interest repayment has already begun to impose an intolerable burden on the national accounts. If the national debt is now so vast that current price inflation is near impossible that leaves only one cogent alternative: asset prices must fall.

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HOLA447

This is from January 2014, but also posed concerns policies are creating deflation (and inequality).

Jan 2014
Meanwhile, the Fed's easing program has created a two-class system, Faber says. There are "the well-to-do people that benefit from rising asset prices" and average people, who aren't faring well, he says.
The Fed is largely responsible for higher food, energy and other prices that people have been forced to pay in recent years, Faber says. Higher energy prices are particularly a burden on the poor, as that's where up to 30 percent of their income goes, he says.
..."The larger the government becomes, the less economic growth you have and the more crony capitalism and corruptions you have, because big corporations, and especially the money printers, they're the most powerful people in the world."
Another expert displeased with the Fed is Chris Whalen, managing director of residential real estate firm Carrington Holding Co.
"The policies being followed at the Fed and White House are stifling job creation, even as they encourage moral hazard and the growth of new bubbles in the financial sector," Whalen writes on Breitbart.
The Fed's low-rate policy is "actually encouraging deflation in the U.S. economy by robbing savers of badly needed income," he says.
http://www.moneynews.com/StreetTalk/Marc-Faber-economy-Financial-Asset-Bubble/2014/01/16/id/547399/
Actually the link to Chris Whalen's piece raises some interesting data (even if it's from January 2014) suggesting an alarming trend in the number of 45-54 year olds leaving the workforce; which I may have implications on wage-growth and eventually asset values.
Two-tier... owners and renter-savers/poor. I can't say I'm entirely encouraged when reading reports of Osborne and Vince calling in the bosses of the UK's major housebuilders names to discuss how they can boost supply; and....
Osborne: "We're helping young people who can afford a mortgage payment to get a home of their own, even if they don't have a rich mum and dad who can give them the deposit," he said.

"The housing market wasn’t working for them, builders wouldn't build unless buyers could buy."

Even during the last depression, when industrialism was still advancing to its mature phase, political efforts to "stimulate" the economy usually involved subsidising the faltering sectors of industry and impeding the emerging sectors.
Edited by Venger
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HOLA448

Even during the last depression, when industrialism was still advancing to its mature phase, political efforts to "stimulate" the economy usually involved subsidising the faltering sectors of industry and impeding the emerging sectors

So over the best part of an entire century what have they learnt - nothing.

Politicians and their "lessons will be learnt" = empty words.

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HOLA449
Osborne: "We're helping young people who can afford a mortgage payment to get a home of their own, even if they don't have a rich mum and dad who can give them the deposit," he said.

"The housing market wasn’t working for them, builders wouldn't build unless buyers could buy."

I don't think Osborne has quite grasped this 'free markets' thing. The way it's supposed to work is that the seller and the buyer arrive at price discovery based on what the buyer can afford to pay and the seller is willing to accept- not based on what Osborn or anyone else thinks they should pay.

If markets don't work then why the f*ck have the Tories been privatizing everything not nailed down whenever they get the chance?

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HOLA4410

I don't think Osborne has quite grasped this 'free markets' thing. The way it's supposed to work is that the seller and the buyer arrive at price discovery based on what the buyer can afford to pay and the seller is willing to accept- not based on what Osborn or anyone else thinks they should pay.

If markets don't work then why the f*ck have the Tories been privatizing everything not nailed down whenever they get the chance?

There's not a shred intellectual coherence about anything the Tories do any more. They talk fulsomely of small govt but in practice they borrow, spend and print like Latin American marxists. Spend decades reviling the dirigiste EU but connive to ensure the country never leaves. Blame Gordon Brown for not fixing the roof when the sun is shining then set fire to the stairs.

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HOLA4411
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HOLA4412

So now productivity is a bad thing? I find the use of language here quite interesting- we have 'glut' -not abundance take note- but a 'glut'. And we have 'flooding'- and when is flooding ever a good thing? Rarely if ever. Then we have 'bearing down' well that's clearly a bad thing too- who wants to have anything 'bearing down' on them-I certainly don't.

So what does this all mean? After all we are told that the great virtue of Capitalism is it's fecundity- it delivers the things we all need better than any other system- that's it's USP, right?

But there seems to be a problem- instead of being a cause of celebration this productivity is coming to be viewed as a threat- but a threat to what or who exactly?

Not to me- I like cheap stuff- the more the better- I fear no 'flood' of the things I want to buy- bring it on!

Oddly what seems to be threatened by this 'glut' is the very system that claims to exist in order to bring this state of affairs into being.

In other words the very system that claims to exist in order to create abundance seems to be threatened by that very abundance!! How can this be?

Perhaps Moses can provide an answer- He never did get to the promised land of course- but suppose he had-what then? Who would Moses have been in the land of plenty?

He would have been irrelevant- after all who would have needed a prophet or an oracle of scarcity in a world of abundance?

So when the high priests of capitalism tell us that we must fear the monster of deflation might it be that it is their understanding of their own ultimate irrelevance that forms the basis of this anxiety? They, like Moses, are creatures of the realm of scarcity, so what place is there for them in a world where scarcity is 'threatened' by the over prolific outputs of a hyper productive technology?

It would appear that to the people who run capitalism the worst thing that can happen would be for capitalism to succeed in delivering the abundance it has always promised to deliver- they are, after all, experts in scarcity- so from their point of view lack of scarcity really is a bad thing- it would put them all out of work. :lol:

You don't know what you're talking about. In some cases the 'glut' of factories has reduced productivity by upsetting the balance of supply and demand in raw materials and feedstocks. This is about more than factories pumping out TVs and iPads, the whole global supply chain is currently out of balance due to excess capacity in certain key materials. The rebalancing is going to bring a world of pain for many people.

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HOLA4413

So now productivity is a bad thing? I find the use of language here quite interesting- we have 'glut' -not abundance take note- but a 'glut'. And we have 'flooding'- and when is flooding ever a good thing? Rarely if ever. Then we have 'bearing down' well that's clearly a bad thing too- who wants to have anything 'bearing down' on them-I certainly don't.

So what does this all mean? After all we are told that the great virtue of Capitalism is it's fecundity- it delivers the things we all need better than any other system- that's it's USP, right?

But there seems to be a problem- instead of being a cause of celebration this productivity is coming to be viewed as a threat- but a threat to what or who exactly?

Not to me- I like cheap stuff- the more the better- I fear no 'flood' of the things I want to buy- bring it on!

Oddly what seems to be threatened by this 'glut' is the very system that claims to exist in order to bring this state of affairs into being.

In other words the very system that claims to exist in order to create abundance seems to be threatened by that very abundance!! How can this be?

So do I, but I've not got a VI in such businesses, or a scrambling ill-formed political view (and money to direct stimulus) that we need more such jobs in certain sectors.

Nor is my business interest under threat by falling prices in such sectors.

There are profitable niches which may always been profitable, but also new emerging sectors. Perhaps even profitable future opportunities for other niche businesses raising profile of frozen's out imbalance in feedstocks/waste from excess consumption/production (pollution - burning electronics in Africa).

-The same kind of public works spending that was very productive in the last depression would be a waste today. Lots of new highways, for example, would not pay off as they did in the past. Improvement of highways had a dramatic effect beginning in the 1930s in increasing the number of autos in use and amplifying other activity that depended on autos, like building of suburbs and shopping centres. There will be much more modest effects today. The number of autos in use is not likely to go up no matter how many roads are built. Congestion can be much more efficiently handled by peak load pricing than by pouring more concrete.

-Even during the last depression, when industrialism was still advancing to its mature phase, political efforts to "stimulate" the economy usually involved subsidising the faltering sectors of industry and impeding the emerging sectors. This tendency to retard is bound to be more pronounced because of much more frightening impacts of information technology in reducing economies to scale, reducing the demand for unskilled labour, breaking down the barriers between occupations, and shifting distribution of income toward the better educated.
-Investment in the "industrial base" in an attempt to preserve high wage jobs for voters with low skill are destined to show meager returns. They are force-feeding more capital into a declining sector. For example, plans to create "manufacturing extension centres" modeled on the agricultural extension centres of the last century are no more likely to halt the decline of manufacturing than agricultural extension services were to reverse the decline of farming.
-The reason that manufacturing is in decline is not that private business is unaware of how to manufacture, but because information technology is supplanting industrial technology as the main area of value-added-activity.
-Redistribution diminishes incentives to save, while reducing the capital of those who do most of the saving. A common feature of all stimulative initiatives, especially those that involve little but income redistribution, without a substantial component, is that they expand government debt. This runs down the national balance sheet, increasing the debt burden without increasing earning capacity. In logic, this means a deeper depression in the end.
There are many experts, of course, who will say that the key to prosperity is to revive manufacturing. Their prescription to do this is to focus incentives in ways that encourage long-term, fixed investment. It sounds plausible when viewed from a conventional perspective. But it is backward-looking and probably won't work.
The reason fixed investment is lagging is that its productivity has fallen. Most of all the industries that figured in the post-World War II boom now face saturated markets with worldwide overcapacity. Force-feeding additional capital into fixed investment in the manufacturing side will only aggravate the long-term problem by increasing the overcapacity. It also takes resources away from the small business sector which creates new jobs.
Saturated or slowly growing replacement markets with overcapacity require companies to compete by increasing productivity. This is a good thing in itself. But higher productivity with flat markets means fewer jobs. Short of buying the products directly and giving them away, which is obviously ruinous, there is little that can be done to rescue old-line manufacturing in aggregate.
The hope for the future lies in incubating new products and services, in other words, in entrepreneurship. To do that, flexibility and adaptability must be the hallmarks of the economy and government policy. Legions of small businesses should be encouraged to form. Many ideas need to be tested in the market place in order to come up with the 20 to 30 major innovations that will create vigorous economic growth.
Unfortunately, that is not likely to be the path that policy takes.
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HOLA4414
You don't know what you're talking about. In some cases the 'glut' of factories has reduced productivity by upsetting the balance of supply and demand in raw materials and feedstocks. This is about more than factories pumping out TVs and iPads, the whole global supply chain is currently out of balance due to excess capacity in certain key materials. The rebalancing is going to bring a world of pain for many people.

If there are no customers for their products those factories will go bust- just as the free market paradigm predicts. If-on the other hand- they are a source of creative destruction to existing structures then they will replace those structures- again just as the free market paradigm predicts.

What cannot be seriously argued is that artificial scarcity should be introduced in order to preserve the status quo- this is a complete contradiction of what the free market paradigm is supposed to deliver- which is cheaper and better services driven by competitive pressure.

If your position is that 'overproduction' is a threat to things as they are then you do not disprove my argument but confirm it- because I am arguing that the current set up requires scarcity in order to function- and scarcity is not what the free market paradigm is supposed to deliver.

Edited by wonderpup
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HOLA4415

If there are no customers for their products those factories will go bust- just as the free market paradigm predicts. If-on the other hand- they are a source of creative destruction to existing structures then they will replace those structures- again just as the free market paradigm predicts.

What cannot be seriously argued is that artificial scarcity should be introduced in order to preserve the status quo- this is a complete contradiction of what the free market paradigm is supposed to deliver- which is cheaper and better services driven by competitive pressure.

If your position is that 'overproduction' is a threat to things as they are then you do not disprove my argument but confirm it- because I am arguing that the current set up requires scarcity in order to function- and scarcity is not what the free market paradigm is supposed to deliver.

The factories will go bust? How is that going to happen when they're being supported by the Chinese government? The petrochemical industry was in equilibrium for many years, now it's not.

We have a situation where some key intermediates are cheaper than the raw materials used to make them. That's not creative destruction, it's a productivity glut.

Edited by frozen_out
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HOLA4416
The factories will go bust? How is that going to happen when they're being supported by the Chinese government? The petrochemical industry was in equilibrium for many years, now it's not.

We have a situation where some key intermediates are cheaper than the raw materials used to make them. That's not creative destruction, it's a productivity glut.

Either something is sustainable or it's not- and I get the impression that you don't think this is sustainable, in which case it won't be sustained- but the problem is not that there is a 'glut'- the problem is that price discovery is being distorted in this case by the interference of the state.

I am addressing a different situation- one in which price discovery is functioning normally but prices are falling due to improved productivity. In this case the question of a 'glut' is only raised by a vested interest who finds their pricing power failing- to the happy consumers there is no 'glut'-only cheaper goods and services.

So we may be talking at cross purposes here- you seem to be making a very specific point relating to a very specific situation- I am addressing the claim made that the mere fact of price deflation is itself some kind of pathology- which it is not. Deflation is what the free market is supposed to deliver.

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HOLA4417
- Extraordinary easy money and stability in the commodity markets are important factors working to that end [making for prosperity]. - Wall Street Journal (April 1930)
- ...fundamental credit conditions have undergone a marked change for ease not only in this country but all over the world. - New York Times (April 1930)
- "An outstanding development is the sharp drop in interest rates, marking the end of a period of credit strain and bringing rates to the lowest point in several years. In its bearing on general business conditions the advent of really cheap money has been widely heralded, and rightly so, as the most important and promising feature in the general situation. That cheap money is a tonic for the recuperation of business has been proven by long experience.'" - New York Times (April 1930) - quoting April bulletin of the National City Bank.
- "Money rates declined rapidly to the lowest levels since early 1925, the April 1 review of the Federal Reserve Bank of New York states, and accompanying this ease in money, the bond market in March made a vigorous recovery." - New York Times (April 1930)
- "The Federal Reserve policy of cheapening credit through the purchase of government bonds has been unable to make a dent in the conservatism of borrower or bank lender, in short, every anti-deflationary effort has yet to provide positive results"” (Editorial, Barron’s, July 11, 1932)
Falling interest rates were not accompanied by a growth of money aggregates. A repeat of this would be an early confirmation of a coming deflationary collapse. The notion that easy money is a magic tonic that can counter the forces of contraction is likely to seem alluring as an argument than it proves to be a fact. In 1929, neither the Federal Reserve nor the Bank of England could overcome the worldwide forces making for contraction just by manipulating numbers on their balance sheets. Economic historian Joseph W. Davis put it this way:

“A careful reading of a mass of contemporary literature and an analysis of economic and financial developments in 1930 yield little or no support for the views [a] that Federal Reserve policy in that year was open to serious criticism, or that flooding of the money supply by the Federal Reserve System would have effectively checked the contraction or moderated the current and ensuing collapse. With enterprise "collapsed," the forces making for contraction were too strong to be overcome by the stimulus of artificial reducing short-term money rates below the very low levels actually reached”
Also notice the recurring references to monetary policy. Contrary to the current wisdom that stupidly tight money turned the '29 stock market crash into depression, accounts of 1930 speak of "extremely easy money." What seemed to be easy money at the time was denounced later as "too tight" may only show that the dynamic of contraction works behind the scenes. More muscular attempts to counter that dynamic process by inflating faster would paradoxically strengthen the deflationary impulse.

Much more massive QE this time, flooding the system, has bought some time for the VI. Whilst panicking savers into buying over-inflated assets, not earning anything in the bank, scared of having it in the bank, yield chasing on risky investments, and utterly complacent about the value of their homes - with debts racking up, and behind the scenes, banks tidying up their books.

My bet is the crash will come from lack of willing/proceed-able creditworthy borrowers, and we're nearing a return to conservatism of borrowers and bank lenders, against over-inflated asset values, savings having already been raided, and a lot of debt.

What seems to be lost in the monetary debate is that this persistent drop in inflation defies the primary purpose of quantitative easing, which is designed to lower real interest rates. In fact, with nominal yields rising in the face of falling inflation and thus raising real interest rates, the US economy is now closer to a deflationary death spiral than at any time during the Fed’s unprecedented policy designed to prevent just such an outcome.
Though he wouldn’t admit it, Bernanke met his match in 2011. The consumer balked at attempts to stimulate aggregate demand via inflationary policy of negative real interest rates, and ever since, has been raising real interest rates by reducing inflation through lower aggregate demand. This is perhaps the most unappreciated yet significant market development since the financial crisis.
Edited by Venger
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HOLA4418

You miss the point that I was addressing- the complaint is not the these factories have no customers- the complaint is that they are deflating prices by oversupplying the market. Another word for this is 'abundance'.

So why not address the point I was making which is that we have a system dedicated to the creation of abundance that apparently can only function correctly in conditions of scarcity.

In what sane economic system is having too much of the things people want and need a bad thing? Would you prefer the opposite?

Basically the argument being made is that scarcity is required to make the system work- but that system-and the many injustices it gives rise to- is justified on the basis that it will eliminate scarcity.

So there seems to be a deep contradiction here. We have a system that cannot succeed without collapsing.

After all deflation is not a pathology of free market capitalism, deflation is it's entire raison d'être. To create more and ever cheaper stuff is what free markets are all about-right?

OVERsupply is not a feature of the free market. Prices tend to fall in a free market because of increasing production efficiencies. Oversupply is a sign that the market is broken. Why would any sane investor be interested in oversuppy? ! Investors want to be where there is under supply . Oversupply is a feature of a rigged broken market, usually caused by non market interest rates.

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HOLA4419

They are ignoring the real solution to all this, give more cash to the workers.

Unfortunately the main financial and thus only motivation behind running a large company in the UK involves paying the workers less while charging them more for things.

The ones who just finance are maxed out, those left are not interested in borrowing or buying consumer goods so spend their time looking for yield.

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HOLA4420
OVERsupply is not a feature of the free market. Prices tend to fall in a free market because of increasing production efficiencies. Oversupply is a sign that the market is broken. Why would any sane investor be interested in oversuppy? ! Investors want to be where there is under supply . Oversupply is a feature of a rigged broken market, usually caused by non market interest rates.

As I said I was not addressing the problem of rigged markets- I was addressing the claim that falling prices are in all cases to be viewed as a pathology of the system- but as you point out falling prices can be the result of improvements in productivity.

The people declaring deflation as some kind of market failure are not talking about market rigging, they are claiming that the mere fact that prices are going down for any reason is a pathology in need of a cure.

But this claim makes no sense given the oft repeated claim that the great virtue of the free market system is that competition leads to falling prices for the consumer.

The way I resolve this apparent contradiction is to point out that Capitalism is a system that evolved in an environment of scarcity and thus is maladapted to an environment of relative abundance- it just does not function properly in a world where improved productivity is eroding pricing power in a very widespread way.

So the reason that deflation is seen as a bad thing is simply because the system was never meant to operate in a delflationary environment.

Citing specific examples of market rigging creating artificial oversupply does not address this point at all- it's an entirely different issue.

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HOLA4421

Looking at QE from a personal perspective it has becalmed my savings from the point of view that the headwind of interest rates means it aint moving very fast.....I suppose that is deflationary and is an impairment to income. What the knock on effect to other groups such as borrowers is may be different.

Edited by crashmonitor
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HOLA4422

As I said I was not addressing the problem of rigged markets- I was addressing the claim that falling prices are in all cases to be viewed as a pathology of the system- but as you point out falling prices can be the result of improvements in productivity.

The people declaring deflation as some kind of market failure are not talking about market rigging, they are claiming that the mere fact that prices are going down for any reason is a pathology in need of a cure.

But this claim makes no sense given the oft repeated claim that the great virtue of the free market system is that competition leads to falling prices for the consumer.

The way I resolve this apparent contradiction is to point out that Capitalism is a system that evolved in an environment of scarcity and thus is maladapted to an environment of relative abundance- it just does not function properly in a world where improved productivity is eroding pricing power in a very widespread way.

So the reason that deflation is seen as a bad thing is simply because the system was never meant to operate in a delflationary environment.

Citing specific examples of market rigging creating artificial oversupply does not address this point at all- it's an entirely different issue.

You are overlooking the real basis of free markets, Creative Destruction. Free markets never supply to the point of monotonous overabundance. It is uneconomic. Investors look for innovations that REPLACE the status quo. There is no profit to be made in overabundance, except when rates are held so artificially low that margins can still be made beyond the point it is normally economic.

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HOLA4423
You are overlooking the real basis of free markets, Creative Destruction. Free markets never supply to the point of monotonous overabundance. It is uneconomic. Investors look for innovations that REPLACE the status quo. There is no profit to be made in overabundance, except when rates are held so artificially low that margins can still be made beyond the point it is normally economic.

What I am saying is that the primary virtue claimed for free markets is that they destroy pricing power via competition between suppliers for market share- and that of course includes the idea of creative destruction in which an innovator disrupts existing established players- so no I don't overlook it.

My claim is that abundance threatens the system in a very basic way because that system is predicated on scarcity. Of course you are right that no one will produce products that they cannot sell for a profit- but nor can they fail to compete on price. So what happens is that margins get shaved ever thinner as productivity increases and prices are driven down- so profit does not vanish entirely- it just becomes very small.

And this is what we all want right? Ever shrinking prices? But what about wage levels and R&D? What about debt servicing costs that do not shrink as margins decline?

The whole system is predicated on the idea that goods will be scarce enough to command a reasonable margin of profit to allow these thing to be maintained- so scarcity is not the enemy of free markets, it is essential to them.

Take an extreme example- somebody creates a device capable of manipulating matter so that you can take a handful of mud and from it make anything at all- gold, food, clothing- anything at all, at near zero cost.

The day this device appeared would be a great day for the human race- the age of abundance has arrived- but it would be a disaster for free market capitalism which would become utterly redundant overnight.

Without scarcity there is no market. Yet the grand purpose of that market is to eliminate scarcity. So the more successful the market is in creating cheap and plentiful goods and services, the closer it gets to it's own destruction. Abundance is both the grand objective of free market capitalism and it's nemesis.

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HOLA4424

The day this device appeared would be a great day for the human race- the age of abundance has arrived- but it would be a disaster for free market capitalism which would become utterly redundant overnight.

Because, as we all know, there's an infinite supply of mud, therefore everyone can have as much as they want to feed into their magic machine to make anything they could possibly want.

Oh, hang on, there's not.

So there's still scarcity. It's just that people who still don't have much would be vastly richer than ever before, because they could produce everything they need in everyday life from the mud in their garden. Otherwise, instead of competing for gold, people would now compete for mud

Will people ever tire of posting this nonsense? 'Post-scarcity' is the last, desperate attempt by Commies to pretend they have some relevance in a post-industrial world. It will never exist in the real world, unless you figure out how to create an infinite amount of stuff from nothing.

Edited by MarkG
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HOLA4425

Because, as we all know, there's an infinite supply of mud, therefore everyone can have as much as they want to feed into their magic machine to make anything they could possibly want.

Oh, hang on, there's not.

So there's still scarcity. It's just that people who still don't have much would be vastly richer than ever before, because they could produce everything they need in everyday life from the mud in their garden. Otherwise, instead of competing for gold, people would now compete for mud

Will people ever tire of posting this nonsense? 'Post-scarcity' is the last, desperate attempt by Commies to pretend they have some relevance in a post-industrial world. It will never exist in the real world, unless you figure out how to create an infinite amount of stuff from nothing.

This is the point at which Capitalism completely stops serving any useful purpose and becomes self serving. There is simply no need for it any more since it is nothing more than a useful tool to reach an end goal, if it can. To claim this is not to be a 'Commie', it is to see beyond the simulacra - anybody who continues to take part in a Capitalist mud based economy in this scenario would be insane.

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