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re: Is outright deflation the only thing that will turn around public opinion on economy?
Posted on 1/26/26 at 12:39 pm to Bard
Posted on 1/26/26 at 12:39 pm to Bard
Your points relating gdp to deficit are valid. And show the real problems.
These conversations about inflation are a bit futile because we never have accurate numbers related to inflation. In the past decade, prices have doubled on many items we purchase, yet we typically report inflation rates between 2-4% outside of the Covid period. I think we hit 9% during Covid. Even with compounding, the numbers don't seem to support the actual prices we are paying. Hard to have a good conversation based on bad data. This has been going on for years, regardless of which party is in the white house.
I mentioned previously that Oreos cost over $6 at Walmart. I like Oreos. How far back does one have to go to the days when they were $3?
We have been a consumer driven economy for years. The average consumer drives a large percent of our gdp. The average consumer is struggling more than most time periods in my lifetime. Deflation would fix some problems and create others. There is no fix that is not painful. Best hope is for wages to rise faster than inflation for an extended period and for inflation to be closer to zero than we have seen.
These conversations about inflation are a bit futile because we never have accurate numbers related to inflation. In the past decade, prices have doubled on many items we purchase, yet we typically report inflation rates between 2-4% outside of the Covid period. I think we hit 9% during Covid. Even with compounding, the numbers don't seem to support the actual prices we are paying. Hard to have a good conversation based on bad data. This has been going on for years, regardless of which party is in the white house.
I mentioned previously that Oreos cost over $6 at Walmart. I like Oreos. How far back does one have to go to the days when they were $3?
We have been a consumer driven economy for years. The average consumer drives a large percent of our gdp. The average consumer is struggling more than most time periods in my lifetime. Deflation would fix some problems and create others. There is no fix that is not painful. Best hope is for wages to rise faster than inflation for an extended period and for inflation to be closer to zero than we have seen.
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Posted on 1/26/26 at 5:11 pm to HailHailtoMichigan!
Isn't it basically universally accepted that deflation is terrible and not something we should ever actually want?
Posted on 1/26/26 at 7:08 pm to WestCoastAg
Not all economic schools believe deflation is bad
Austrian school and Chicago school believe deflation is a symptom of economic growth
Austrian school and Chicago school believe deflation is a symptom of economic growth
Posted on 1/26/26 at 8:41 pm to WestCoastAg
Deflation is incompatible with a Ponzi fiat system. It breaks it quickly.
Posted on 1/26/26 at 9:23 pm to WestCoastAg
quote:
Isn't it basically universally accepted that deflation is terrible and not something we should ever actually want?
In a sound money paradigm, deflation isn’t a concern unless it’s dramatic. On the other hand, as Beaver alluded to, if you’re printing a trillion dollars a year and still experience deflation, you likely have a fricking problem.
Posted on 1/27/26 at 10:13 am to Bard
quote:
Until Congress gets control of its deficit spending, GDP isn't going to be able to grow us out of this. Going back to 2008, there were only 3-4 years where GDP's growth (as a whole number) outpaced that year's budget deficit. From 1980 - 2007, there was only one year where the deficit was larger than GDP growth (1991).
This. This, and This, ladies and gentlemen. Until we get control over our govt finances, all conversations growth, inflation, wage growth, etc are moot.
We CANNOT grow our way out of this mess when we continually run $1.5-2 TRILLION deficits.
Wage growth cannot compete with the growth in our debt.
Posted on 1/27/26 at 11:30 am to WestCoastAg
quote:
Isn't it basically universally accepted that deflation is terrible and not something we should ever actually want?
That’s the accepted narrative pushed onto us by bankers and the Fed because then debt starts to default. Inflation is crucial for people that make money with money.
We’ve painted ourselves into a corner because the growing angst about the economy is being driven by the rising costs of basic necessities which impacts people who don’t benefit from rising asset prices. The only way to reduce the cost of goods without crashing the economy through monetary deflation is to remove as many frictional costs as possible in housing, food, healthcare, etc.
This can be done but it’s real tricky. Start with electricity/energy costs and then focus on reducing added costs to inputs in these industries. If people can’t live and eat theyre going to get angry.
This post was edited on 1/27/26 at 11:32 am
Posted on 1/27/26 at 1:08 pm to DaTruth7
quote:
Sure it did. Salaries couldn’t keep up with the insane money printing and the inflation it caused. It’s not rocket science.
I would put fixing a massive global-level pandemic that caused never before seen chaos in the modern world in the rocket science category.
And as I said, America came out on top, so maybe that money-printing strategy was the best solution.
Posted on 1/27/26 at 1:33 pm to The_Duke
The problem is, not surprisingly, the additional $2T of spending that happened b/c of COVID was never taken away. If we went back to 2019 spending our budget would be balanced based in 2025 revenues.
Posted on 1/27/26 at 1:42 pm to The_Duke
Fixing haha. What was fixed? Or did we just hide out for 4 years and print massive amounts of money? We are the global economic epicenter and would be much better off if we let healthy people work and earn a living instead of being locked in their house.
Posted on 1/27/26 at 1:47 pm to The_Duke
It’s only been 5 years. The covid financial impacts will get much much worse. But you know this.
Posted on 1/27/26 at 2:15 pm to UltimaParadox
quote:
It doesn't help that Trump said he would lower prices. Typical politician speak. This is why we always flip back and forth
Yep. Trump should have just said that he would bring the inflation rate back to it's optimum rate of 2% instead of saying things that make him sound like he had any capability of reversing 3 years of inflation.
Posted on 1/29/26 at 2:43 am to DaTruth7
quote:
Trump and Biden fricked the middle class with their covid response
THANK GOD that additional $2T spending bill didn't pass. If I recall, it only lost by one vote, a Dem that had sense enough to side with killing it...
Don't recall who though...
Posted on 1/29/26 at 5:12 am to Klondikekajun
We literally killed our currency over a fricking bad cold.
Posted on 1/29/26 at 7:58 am to HailHailtoMichigan!
No, broad, uncontrolled deflation across all sectors would not be good for an economy, even if you’re an Austrian.
For Austrians, deflation in key sectors, specifically sectors that have had years of malinvestments, is a good, corrective mechanism of the economy.
For Austrians, deflation in key sectors, specifically sectors that have had years of malinvestments, is a good, corrective mechanism of the economy.
Posted on 1/29/26 at 8:25 am to beaverfever
quote:
We literally killed our currency over a fricking bad cold.
It had early-stage terminal cancer from GFC exposure, COVID stabbed it in the gut a few times with a shite-covered shiv.
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