Deflation?

[libertad]

Nononsense wrote..



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Quote from libertad:

Inflation nor deflation would be bad if everyone adjusted one to one at the very same time...
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This is an economic pipe-dream.

von Mises in his book "Human action" was perhaps the first to give a fully sensible explanation for the above phenomena and how these are caused by the way people act in those circumstances.

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Of course it is impossible...this was implied...

Excellent commentary....

 

[Wallace]

Mizer: counting Price bars is the simplest method I know of to project Time targets.

I found that the Lucas fibonacci ratio number series rather than the Fibonacci series works for me with forex pairs:
1, 3, 4, 7, 11, 18, 29, 47, 76, 123, 199 — any timeframe.

Indicies, futures and stocks may count better using the Fibonacci series:
1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144.

The technique of using Bar Counts is similar to the use of the Fibonacci Price Levels (Retracement) tool to project Price targets.

 

[Cache Landing]

Quote from eusdaiki:

Electronics are not in deflation. They are goberned by Moore´s law. So eventhough the price per transistor does go exponentially down it is only due to the fact that the cost per transistor also went exponentially down... due to growing scaled economies. So income is not reduced but rather increased.

The problem with deflation is as stated above when people expect to receive lower wages for their work in the future. So, as you perceive that your future income is going to be less than your current income, then you don´t want to adquire debt. So the demand for money goes down and the price of money {interest rates} has to go down as well to incite people to borrow money. They problem is that the price of money can only go down so far... once you´ve reach 0% interest and things don´t pick up, you have yourself a real problem... demand wont go up wven with free money! {the problem that´s been haunting japan for the last decade} You have very few tools for increasing monetary demand in this scenario.

The problem increases as we follow into the spiral of deflation, since there´s not much money in the market then people wont pay much for pretty much anything that´s not really necesary {it could even lead to a Giffen paradox scenario} and the markets react by offering everything much cheaper, but we land ourselves in the same problem in the goods market as we have in the monetary market. Things start selling below cost, and companies start going broke, people get laid off and that increases the labor supply further reducing the salaries of workers in the remaining companies and causing more deflationary expectations to further reduce monetary demand and aggravate the problem.

One way to fight deflation is to increase goverment spending, perhaps by a war, this would give money to companies involved in the war effort, force them to hire many workers, combine this by the fact that the army recluits much of the work force, reducing labor supply and increasing the value of labor.
And perhaps, just perhaps you put yourself into good old inflation again... it´s actually quite simple {in theory} but you need to be specially carefull not to over do it....

you might really screw things up from there...

This is the best post on this thread. I was starting to wonder as I read through the initial posts, how many people were going to refer to the price drop in electronics as "deflation". In terms of economics that is NOT deflation, it is merely a reflection of a competetive market. In fact, if the prices didn't drop and new technology kept getting more expensive, that would be a sign of hyperinflation.

One thing that wasn't mentioned in the above post that is worth mentioning, is that world trade can solve the hypothetical deflationary spiral.