'Inflation' vs 'deflation' according to investment bankers(/economist in their ivory towers). May I humbly suggest that for laymen with little policy experience, pls DO NOT START OFF THINKING LIKE published ECONOMIST in order to first build oneself a good, organic foundation in the study of economics/ politics etc. I.e. DO NOT THINK ABOUT INFLATION/ DEFLATION as published economist think but in terms of how the poor man on the street thinks. E.g. - public school/ uni education is Singapore is heavily subsidised (price DEFLATED): this is akin to deflating the price of education so more children can have a good (INFLATED) shot at doing well in life. - Cigarette prices are legislatively INFLATED as a means to preserve health and as a claw back mechanism since smokers are expected to contribute less income taxes (retire early(Ill health/ stroke)), stay in hospital more (heart attack, diabetes etc)/ DEFLATE the future burden of ill health through a DEFLATED % of active smokers. - cost of owning a private car for in Singapore is legislatively INFLATED (COE, ERP, ARF, petrol tax, road tax, parking fees etc) to recognise the premium nature of private transport and to DEFLATE the number of road congestion causing cars around. - Bus fare/ public transport prices are DEFLATED with the S$1.1 bus service enhancement programme (BSEP) to improve commuter experience so that fewer will depend on private car/ taxi transport and thus DEFLATE overall frequency of road congestion etc. - Hospital medical care prices are DEFLATED with INFLATED subsidies for C class wards to help less educated/ poorer Singaporeans cope with increasing healthcare costs over the years etc. - access to dangerous addictive/hullicinogenic drugs (LSD, heroin etc) is DEFLATED with legislatively INFLATED trafficking penalties such as the mandatory death penalty for drug trafficking etc. ------------------------------- The reason for Japan's economic stagnation AFAIK is because of its growth bubble >20 yrs ago when greed drove its property prices shot through the roof resulting in widespread demoralisation of society if not an increased rich-poor divide (people who rent become demoralised and prefer to sleep on streets than work to pay escalating rentals). General inflation favours those who are sly/smart enough to take advantage of it and disadvantages those who just sit on their pile of cash without being aware what inflation is doing to it. Investment bankers LOVE INFLATION because it allows them MORE REASON to gamble with depositors $$$: these folks thrive on instability: e.g. merger/ acquisition jobs, selling unit trusts, trading I'm futures/ other derivatives etc etc. In the short term, there is increased economic activity since people hand their savings to bankers to invest out of fear of erosion due to inflation, however, in the long term, there might be severe repercussions if the investment is not in economic growth but in unjustified asset price increase/ Potemkin investments like Japan had been in 1990s: only serving to frighten away investors due to stratospheric rental costs: a consequence of inflated (property) asset prices. It remains a pity that most Japanese do not have a good understanding of God that mainly comes from the study of Abrahamic religion/ similar and currently consider Shinzo Abe their god and leader (like their emperor in WW2): only time will tell when they will have to find a new god since Abe will surely fail given to the weakness of his structural reforms (if any is to be seen at all): again aggravating the wealth divide which adds to societal problems etc. So it is better to first look at the items being considered and how the regulation of such prices improves or degrades society rather than using the terms "inflation/ deflation" closely (and recklessly) as economist ought to do because a majority of economists employed/ paid by political parties are there only to give support to a political agenda, paid to justify a private political interest with little concern for the small man in the street. Only honestly thinking people can/ deserve to demand accountability from dishonest politicians. Thus the need to think of inflation/ deflation in simple, honest, itemised (organic) terms, based upon how it affects the poor man in the street. Inflation in the access to good through subsidies to 'good' (legislative price deflation) and Deflation in access to what is evil/ harmful (increases in tobacco tax etc) through inflated prices discouraging access to the tobacco drug. This is how inflation / deflation should be seen. People on the ground should learn this to demand accountability from economist and politicians hiding in their ivory towers with the golden question: is the quality of life of poor individual IMPROVING OR DETERIORATING. That is much more important than pie in the sky definitions of 'inflation'/ 'deflation' when the basket of good in respect of such pronouncements is yet publicly defined let alone agreed upon. Communism was one eminent economic theory/ system of thought, yet time revealed its ponzi elements: revolutionaries: mainly stressed-out trouble makers who stole power by promising the moon if not the sun, only to follow the tyrannical ways of whom they overthrew once themselves gained power. Abenomics will follow somewhat in this shadow, given the vagueness of 'structural reforms' that Mr Shinzo Abe promises, which untill now seems to only benefit the rich, making Mr Abe very likely to be voted out due to his neglect of the very poor he ought to uplift.
Until society gets its priorities right, poverty will be with us always. Inflation in the academic sense ('economics') is the sustained increase in general PRICE LEVEL of goods. Guess it is even more controllable than AIR-POLLUTION, which today is almost 99.99% man made (0.01% due to volcano eruption etc). Inflation in price of goods however, is more than caused by excess printing of dollar bills and other related 'paper' of $ equivalent such as treasury bills by the gahmen. The following Pict illustrates how much $$$ SG gahmen has printed in last 20plus years: [pict source: https://secure.mas.gov.sg/msb-xml/Re...=I&tableID=I.1 ](Reference: Money printing (/borrowing) by Singapore government- how much is too much?) The following reveals a much more serious state where the Zimbabwe gahmen printed $$$ at an almost infinite rate: (Caption: Zimbabwe currency to exchange for gold please- takers, anyone? [Image source]) The way U use "inflation/deflation" is confusing exactly BECAUSE DIFFERENT PEOPLE can use the term differently depending on what basket of goods they are referring to and why. I prefer to use the terms in a narrow sense, applying it to ONE GOOD AT A TIME: and explaining my points CLEARLY each time. U need to study, because as U grow up, your bills only increase ('inflate'???!!!): your parents retire and ask U for $$$, as do your wifey and kids. The pocket $$$ will NEVER be enough to cover let alone your medical bills even if inflation were zero or below, needless to say, once U leave school, pocket $$$ stops. Indeed you ARE right (on transferring costs), subsidies are transferring cost from subsidising one party to all the rest. Then again, isn't that what we have elected governments for??!!!. If we didn't value education, SAF, police service, healthcare, baby bonus, subsidised public transport, expensive politicians, civil defense, 'subsidised' public housing etc etc, then PAP wouldn't have garnered 60.1% valid vote in 2011GE (60.1% because PAP is far from perfect, it they were perfect, than the result would be a much higher % considering that blackmail/ gerrymandering 'earned' significant votes too). So in an isolated/ basic sense, taxes are 'inflation' because it causes you be to afford less, however, in the sense of income taxes, this is payback to society since it is assumed it n modern society that the most successful amongst us are also those who benefited MOST from society in terms of healthcare, education, public peace/ good fortune etc... Thus my abhorrence for 'economist' making sweeping statements like the 'inflation=good, deflation=bad' when the real question should be: after all the grandmothergoose story and complicated mathematical postulations, is the overall quality of life of the poor man on the streets BETTER OR WORSE???!!! And if not, how do we better it. The terms "inflation/deflation" mean absolutely NOTHING if the ultimate benificiaries are not properly defined/ the poor remain unconvinced. In short, 'inflation/deflation' is a man made phenomenon just like conscription, elections and the use of nuclear fission are man made phenomenons used mostly for good purposes (e.g. protecting country, achieving peaceful democracy, deriving 'clean' energy respectively), but also for EVIL (e.g. populating Hitler's army/ bogus DPRK elections/ Fukushima nuclear explosion (due to poor design/ negligence) respectively). Ivory tower economist are paid what the rich(investment banks/ bankers) and their political representatives want them to say . The real economic/ social discussion should always be: how does this/ that help the plight of the poor and are U sure this/that plan will work without disadvantaging the poor? Until society gets its priorities right, poverty will be with us always. .
The government policy of regarding deflation as such a big evil that must be avoided at all costs, just continues to make the rich, richer. Another RepubloCratic, corporationist policy. Is mild deflation really worse than unemployment or stagnation due to a mild depression ? Raise interest rates and curtail the excessive credit market. Moi r > g is what it's about No
Deflation rears its head... Global shares lose to bonds as deflation danger dominates May 3, 2016 - Asian shares slipped on Wednesday as worries about global growth and creeping deflation resurfaced, undermining commodities and boosting demand for safe-haven sovereign debt.
Raise interest rates ? They don't need to actually "raise" them, the Central Bank just needs to stop subsidizing out loans to keep them down. This is actually extremely expensive, and in the long-term is going to inevitably result in inflation (the money to keep the interest rates down has to come from somewhere). Many people seem to mistakenly think the Central Bank can set interest rates to whatever they want. These people do not really have a good understanding about how the Central Bank goes about trying to change the interest rates. It all comes down to a basic fact: if you want people to change their behavior you have to pay them to do so. To even modify interest rates by 1% takes a tremendous amount of money. The Central Bank can only get this money by diluting the value of the currency. So knowing this, how does it really make any sense to try to go messing around with interest rates in the economy? Seems like a huge waste of resources. Oh sure, it might be wonderful if we could magically make interest rates go from 4% to 3%, but it comes at a tremendous cost. The Central Bank would be better off just giving out interest-free loans to specific businesses that needed it rather than try messing with the entire economy.
Wow An upload from so long ago being "quoted" Well I still feel the same. Raise interest rates by whatever means. Moi Greenspan Fan r > g View attachment 42870 Across an immense, unguarded, ethereal border, Canadians, cool and unsympathetic, regard our America with envious eyes and slowly and surely draw their plans against us.
