Peston The Parrot.

[wonderpup]

I heard Robert Peston on radio 4 this evening repeating the cant that deflation is a problem because it causes people to defer purchases, pushing consumption into the future that would otherwise take place in the present.

This is from a man who almost certainly owns state of the art technology that he purchased in the full knowledge that better/cheaper technology would be available in the near future- thus he himself disproves the very bullshite he sees fit to feed the public on the BBC.

OK, this is fairly trivial example of how cod psychology inserts itself into the economic debate- less trivial perhaps is the recent decision in Japan to escalate their QE programme into the stratosphere in the hope of creating such anxiety in the population concerning future inflation that they will immediately start to spend their savings rather than see them consumed in a future inflationary holocaust.

But in what universe does making people more frightened about their future cause them to deplete the one buffer they have against future catastrophe- their savings? If the morons in charge of the bank of Japan had the most rank layman's grasp of human psychology they would realize that scaring people will not make them spend their savings- on the contrary it will make them cling all the harder to them as a defense against an increasingly frightening future.

So I have come to the conclusion that it will not be failed economic paradigms that will bring down the system, but the application of cereal packet psychological theories that model human behavior with all the sophistication of an episode of Scooby doo.

Peston the parrot is paid a fair chunk of the public's money-money extracted under pain of imprisonment- so is it too much to ask that he cease to propagate cartoon theories of human nature and instead start to provide an adult analysis of issues such as deflation, rather than simply falling into line with whatever prevailing bullshite cod psychological theory dominates the diminutive mental landscapes of those who are supposedly in control of the system?

Yours,

Angry of Tunbrige wells ( I was going to place the 'angry' emoticon here, but it seems to have been made unavailable- which makes me very indeed. Grrr.

Edited November 12, 2014 by wonderpup

[Guest UK Debt Slave]

The solution is simple

Stop paying the license fee and disconnect the tube from all the BS

Save yourself 145 quid a year and don't be tormented by w@nkers like Peston and Channel 4's crypto-Marxist, Paul Mason

[Guest_northshore_*]

...Peston the parrot is paid a fair chunk of the public's money-money extracted under pain of imprisonment- so is it too much to ask that he cease to propagate cartoon theories of human nature and instead start to provide an adult analysis of issues such as deflation, rather than simply falling into line with whatever prevailing bullshite cod psychological theory dominates the diminutive mental landscapes of those who are supposedly in control of the system?

Peston works for the ministry of media. He doesn't strike me as stupid but he parrots certain truisms because they appear to be the truisms adopted by an establishment doing everything they can to avoid change to their own detriment, mostly by aggregating many many solvable micro problems into a conveniently elusive 'macro' problem. So he's doing his job. I imagine he, Mason and others have quite different views in private.

[thecrashingisles]

wonderpup - the most sensible thing you've ever written on here.

[onlyme2]

Deflation in the housing market is causing the average ftb age to rocket.

Maybe Peston should digest that for a bit.

[stormymonday_2011]

I would have thought that the mountain of debt owed by UK citizens suggests that people have been rather too keen to bring forward consumption in all its forms which is why we are now in such a mess. In particular property prices levered into the stratosphere on the back of this borrowing binge are a huge drag on the economy It is the cost of servicing the debt even at rock bottom interest rates that is preventing people from spending on other things. Of course, Pesto understands this very well but as he is a shill for the establishment he is hardly likely to say so on the BBC.

Edited November 12, 2014 by stormymonday_2011

[Wurzel Of Highbridge]

The only deflation or delayed purchases the government.economists are worried about are property/asset purchases as they are the only items people buy at significant cost.

Even if the price of cars were dropping each year, would people hold out 12 months to save £1,000?

No. Would you starve for a week to save 5p on a loaf of bread? No.

Would you wait a months to save £3 on a pair of shoes? No.

Would you wait 6 months to save £20,000 on a house? Yes.

Deflation is an economic theory with no proof or evidence that deflating prices causes reduced consumption. There is also no evidence that high inflation pulls forward consumption, except in housing bubbles.

[billybong]

But in what universe does making people more frightened about their future cause them to deplete the one buffer they have against future catastrophe- their savings? If the morons in charge of the bank of Japan had the most rank layman's grasp of human psychology they would realize that scaring people will not make them spend their savings- on the contrary it will make them cling all the harder to them as a defense against an increasingly frightening future.

Especially like in Japan with an aging population dependent on savings to eke out their retirement. It's mega crazy.

[thecrashingisles]

Especially like in Japan with an aging population dependent on savings to eke out their retirement. It's mega crazy.

Perhaps they want to encourage the hara kiri trade.

Edited November 12, 2014 by thecrashingisles

[thevaliant]

I heard Robert Peston on radio 4 this evening repeating the cant that deflation is a problem because it causes people to defer purchases, pushing consumption into the future that would otherwise take place in the present.

I always find this mostly to be rubbish anyway. Suggesting people will defer purchases because it's cheaper? How:

Essentials - food, water, power etc - Well, I suppose I could not eat for a week on the assumption it'll be cheaper next. Wouldn't care for the side effects of doing so however (death).

Non-essentials (iphones and the like) - This will always fall into two categories anyway - those who buy straight away anyway as the next big thing and those who wait a while ANYWAY for tech prices to fall. I can't see people breaking from that habit because of a bit of 1% deflation......

[Kalyayev]

The solution is simple

Stop paying the license fee and disconnect the tube from all the BS

Save yourself 145 quid a year and don't be tormented by w@nkers like Peston and Channel 4's crypto-Marxist, Paul Mason

My license fee is included in my rent so doubt I can stop paying it

On the plus side, I haven't directly paid for a license due to this same scenario for at least 5 years. Maybe I need to get them to reduce my rent after I throw the TV out of the window (smashed windows from thrown TVs should come under normal wear and tear if I remember the contract correctly ).

[winkie]

There is already far to much tat and excess in the system.... No need to delay, when you can buy things people no longer want for less today...labour is competitive,and it is possible to shop around.....those with the most can quite easily pay the most......people can create their own inflation or deflation.

[Venger]

I don't borrow, and limit my spending in retaliation, because other market participants have bid up house prices crazy high - hyperbubble way beyond what I'm prepared to pay/borrow. £475K for dire 2-bed flat in Tooting? £1m for a 5 bed wreck further out by the train-line?

If people on the margin more prone to finding it tough to settle their debt commitments at such low-rates, maybe more of them will look to sell their houses, leading to lower prices.

The excuse-choir for reckless debtors, and the VI owners not wanting to spill a drop of their HPI, mostly fret about deflation vs £475K apartments.

They are often the first to tell you all about 'supply and demand' meaning forever hpi. They can try some supply and demand with monetary velocity sliding.

[XswampyX]

If we can't have deflation why fuc*ing bother? What's the point of any of it?

2 million years into the future and a pencil is still more expensive to make than it was in the 1800's.. . . . .. . WTF!

How about we run inflation at -2% for the next 30 years just as an experiment, and see how that pans out?

Edited November 13, 2014 by XswampyX

[The Eagle]

Someone intelligent who can think independently would never get a job at the BBC, therefore you get articles like the above.

[campervanman]

What is difficult to understand about people putting off buying something today if it will be cheaper tomorrow? It is just the reverse of the housing market psychology where people spend irrational amounts of money on the smallest and most expensive houses in Europe because they think that tomorrow they will have to pay more for an even smaller house. I would have thought Peston's words were obvious even to the most blinkered anti BBC types and the fact that he may buy technology before it becomes cheaper probably puts him in the minority of Brits, a bit like someone who has been on this forum for a while who has yet to be intimidated into buying a house. In this respect Peston and HPC refuseniks <>.

Edited November 13, 2014 by campervanman

[campervanman]

Someone intelligent who can think independently would never get a job at the BBC, therefore you get articles like the above.

The eagerness of the anti BBC trolls to jump on the next available bandwagon (this thread) is a perfect illustration of where independent thought has been abandoned in favour of inbuilt bias and bigotry.

[b w]

The eagerness of the anti BBC trolls to jump on the next available bandwagon (this thread) is a perfect illustration of where independent thought has been abandoned in favour of inbuilt bias and bigotry.

Poor old auntie beeb, stop picking on them you anti BBC trolls

If only the BBC would stop demanding money with menace to pump propaganda into my front room. The fact you can get banged up for not paying to have propaganda pumped into your front room is the icing on the BBC cake.

Anyone that defends this piece of s*** needs their head tested , hows that for inbuilt bias and bigotry

[200p]

We talked about the inflation/deflation argument in the very early days of HPC in 2004-2006. I remember speculating that deflation would be bad in the way he suggested - he reads HPC.

In Alistair Darling's book, he also said that everyone in Whitehall knew about the threat of falling prices would have on the economy that was based on consumer spending. If house prices fall, people become afraid and don't spend.

Additionally inflation bails out bad decisions, and rewards people who take risks with money. So if I go and spend £500,000 on a studio flat in Mayfair, and that was the highest price paid ever. Eventually, my decision would be bailed out by inflation.

Edited November 13, 2014 by 200p

[evetsm]

deflation and deferred consumption is the way to build a sustainable economy, not a gdp(output) based economy that is premised on steady inflation(savings theft) and ever expanding loans books ("assets")for banks.

In a mild and steady deflation, you still have to buy neccessities now, and non-essentials as you have sufficient savings. Savings grow and are the seedcorn for investment, and there is a link between the propensity to save and the propensity to consume given by the market interest rate .As it should be.

[latterdaysinner]

All the talk about delayed purchases is clearly a red herring. What policymakers are really afraid of is that deflation means that they lose control of the real interest rate in the economy. Banks cannot pay negative nominal interest rates despite what Libby might have claimed, and if deflation is significant, that could imply a high real rate of interest. That would in turn mean that they can't engineer the sort of stimulus that they've been implementing in the last few years. Can't say I feel very sad about that.

[Bloo Loo]

The only deflation or delayed purchases the government.economists are worried about are property/asset purchases as they are the only items people buy at significant cost.

Even if the price of cars were dropping each year, would people hold out 12 months to save £1,000?

No. Would you starve for a week to save 5p on a loaf of bread? No.

Would you wait a months to save £3 on a pair of shoes? No.

Would you wait 6 months to save £20,000 on a house? Yes.

Deflation is an economic theory with no proof or evidence that deflating prices causes reduced consumption. There is also no evidence that high inflation pulls forward consumption, except in housing bubbles.

This is the point..REAL demand cant wait...purchases of vanity and other desirables, which we make buckets off, could wait till it was cheaper...

Although, if you think about it, waiting is nearly always cheaper than buying the thing on credit NOW. Yet people still buy on credit when it would be cheaper to pay cash saved.

[nnails]

I dont get deflation theory that people stop buying.

if my car broke tommorrow i would either get it fixed or replaced .

same with almost everything else.

But if it is true house market could be in for one hell of crash if house dont start selling soon

[gf3]

This is the point..REAL demand cant wait...purchases of vanity and other desirables, which we make buckets off, could wait till it was cheaper...

Although, if you think about it, waiting is nearly always cheaper than buying the thing on credit NOW. Yet people still buy on credit when it would be cheaper to pay cash saved.

Of course 0% credit cards are out there.

[Bloo Loo]

Of course 0% credit cards are out there.

for purchases?