Why Deflation Will Be Long Term

[gnome]

I'm curious about how much the demand for cars in general will decline as the morass deepens and unemployment increases.

Even when we do come out of this (and that's likely to be much later than most are currently hoping), there will be a new "financial conservatism"... some by lenders requiring borrowers to be more substantial and to make down payments... others by consumers wanting to cut back and build some savings for the next potential lay-off period.

New car demand might drop what... 15-20%? What's the UAW going to do then? Ask for more money so they can keep paying benefits and high salaries while making more cars than can be sold?

 

[libertad]

Irm21

Deflation is a contraction in the supply of money.

This period is not deflation but disinflation

People are liquidating all assets to raise capital

Prices are not falling across all assets

Medical care, univerisities, is not getting cheaper nor has gold dropped significantly

This period of liquidation will last longer than most expect but inflation will come with a vengenance

In addition the weak situation in the Usa will lead to stagflation as raw materials and basic good prices explode

Dollar is devalued to deal with crushing debts
American will have falling wages as unemployment hits 18 24%

The average American is in for some serious pain



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Exactly why government should be pulling out all the stops to make "individuals bigger first"....

No plant ....no fruit....

You have described exactly what is happening.....

The government gets bigger by monetization....thinking that this is a remedy....

When it only make s things worse......

...............................................................

One more time......

10% consumption tax only is a "real" solution.....This will make
individuals bigger.....


This will help make "individuals bigger FIRST"....

The government cannot collect fruit from a sick plant.....


The cart is before the horse......with no change in sight....

 

[libertad]

Gnome

I'm curious about how much the demand for cars in general will decline as the morass deepens and unemployment increases.

Even when we do come out of this (and that's likely to be much later than most are currently hoping), there will be a new "financial conservatism"... some by lenders requiring borrowers to be more substantial and to make down payments... others by consumers wanting to cut back and build some savings for the next potential lay-off period.

New car demand might drop what... 15-20%? What's the UAW going to do then? Ask for more money so they can keep paying benefits and high salaries while making more cars than can be sold?

.....................................................................

Would it be cheaper for the government just to give every citizen a new GM vehicle ?

 

[gnome]

Quote from libertad:

Gnome

I'm curious about how much the demand for cars in general will decline as the morass deepens and unemployment increases.

Even when we do come out of this (and that's likely to be much later than most are currently hoping), there will be a new "financial conservatism"... some by lenders requiring borrowers to be more substantial and to make down payments... others by consumers wanting to cut back and build some savings for the next potential lay-off period.

New car demand might drop what... 15-20%? What's the UAW going to do then? Ask for more money so they can keep paying benefits and high salaries while making more cars than can be sold?

.....................................................................

Would it be cheaper for the government just to give every citizen a new GM vehicle ?

Maybe. They'll probably try it.

Of course, that would kill all the other car makers in the US... who'd pay for a rice burner when the Aztek is free?

Socializing one thing, then another is a form of economic cancer. No place for it to stop until it at least cripples the victim

We had a capitalistic system at one time... sort of went along with the founding principles of the USA... "Life, Liberty, Pursuit of Happiness".... anybody recall ever hearing about it??

 

[libertad]

At least the taxpayers would get something back that is "tangible".....

ie Pay $15,000 in tax ....

and get a FREE GM.....

 

[Anaconda]

Quote from libertad:

The question is.....what prices a...itted. Going into cash is a sucker's move.

 

[fearless9]

Quote from Anaconda:

Going into cash is a sucker's move.

Why? asset prices are moving down.

regards
f9

 

[gnome]

Quote from fearless9:

Why? asset prices are moving down.

regards
f9

Correctamundo! In fact, over the last year there has been a bull market in "cash"...

 

[dont]

Quote from achilles28:

Nullify CDS, Tarp mortgages. Bam.

Problem solved. Crisis over.

Banks lend again.

Why hasn't that happened?

Thats the only question you should ask yourselves.

Why?

Because the Government is NOT in control.

The Bankers are.

Why?

Because the banks are insolvent. Those bad loans are not going to be paid back!

This is not a crises of liquidity its a crisis of solvency.

 

[gnome]

Quote from dont:

Why?

Because the banks are insolvent. Those bad loans are not going to be paid back!

This is not a crises of liquidity its a crisis of solvency.

Likely correct.

They don't use the word "insolvent", because we know what that means and implies.

But if it's just a "liquidity problem", we're not exactly sure what that means nor how bad it is... and we presume we can fix "liquidity".

Fact is, lots of banks either directly or indirectly have TONS of CDSs [worthless?] on their balance sheets.