Author Topic: why is deflation considered a bad thing?  (Read 15801 times)

mr_orange

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Re: why is deflation considered a bad thing?
« Reply #50 on: August 22, 2016, 10:29:30 AM »
And there's no choice to be made. We live in the world we do. Working longer would be pointless.

I really think this is the point we disagree on.  My cynicism or lack thereof really isn't important. 

The world we live in would be materially different if everyone decided to stop working and businesses were less productive.  There are countless countries globally where this is the case.  The societies have all made different value judgments than ours about what is important to them.  There is certainly a choice to live in these societies instead of ours.  No harm, no foul.

What I am saying is that you can't have BOTH great corporate profits and the conditions precedent to a cozy FIRE situation AND a macro situation with everyone working less and thus less productivity and profits.  These two concepts simply can't exist together.  If people stop buying stuff and profits decrease you'll have less in earnings which will require you to work longer.  Likewise, a deflationary environment causes real borrowing to be more expensive and all the other items that were referenced above. 

Classical_Liberal

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Re: why is deflation considered a bad thing?
« Reply #51 on: August 22, 2016, 10:40:51 AM »
Fair enough.  I'll take you at your word then.  As is evidenced by the hoards of posts debating stress testing of various SWRs, etc. I think you'll forgive me if I'm skeptical about a similar set of motivations from others on the forum.  How many would be willing to work those extra X years if their SWR requirements decreased to 2%?  Would they be willing to trade off 10 extra years of working if it meant that corporate earnings went down significantly?  Would they trade the ability for one of the wage earners in the house to earn a living for less consumption and thus less earnings from employers? 

It seems that you have to choose among core principles espoused on the forum.  You can desire less work, more free time, and all of the benefits implicit to this set of choices that are coupled with higher corporate profits OR you can choose to work more and have lower corporate profits.  You really can't have both.  If people work less, spend less, etc. the businesses will be less productive and produce lower profits; which, in turn, increases your stash threshold using an indexing approach.

I agree and disagree with your assumptions. 

People on this forum consume less, work 50 hours a week and maybe another 5-10 on a side gig to save up enough capital to sustain for a lifetime.  I would agree that this type of life DOES follow your logic.  Return on capital is required for stash to maintain itself, in large part because of inflation.  However,  there is another option.  All of western society could reduce consumption (your scenario).  At this point societal norms could change and the 40-50 hour work week could become the 10-20 hour work week.  This is, in fact, is what John Maynard Keynes thought the end game would be. 

http://www.econ.yale.edu/smith/econ116a/keynes1.pdf

As the world is, it is difficult to construct a life with a 15 hour work week because the norm is 40-50.  Someone wanting to do this suffers from wage decreases, loss of benefits, loss of job security, etc.  If your implication is that everyone consumed less (say 1950's level), then FIRE is impossible... I would say, it would be more difficult in its current form.  But, instead of 10 years working 50-60 hours a week, one could shift to 35 years of 15 hours a week (maybe one week of 40 a month, or seasonal employment, etc). I'm cool with either one.  The economics of that choice, in the reality of western culture, currently favors the former. That's a societal choice, not a necessity.

This is getting off topic & I dont want to be scolded, I know there are some old threads on the forum that talk extensively about the theoretical decrease of consumption on a societal level.

Scandium

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Re: why is deflation considered a bad thing?
« Reply #52 on: August 22, 2016, 10:57:15 AM »
It seems rather disingenuous to benefit from companies producing profits that are primarily driven by consumer spending if your core beliefs compel you to drive a less spendthrift society.  How is it that you reconcile this dichotomy? 

I'm all for people being frugal, but the whole concept is taken to illogical extremes on this forum in my humble opinion.  To vilify spending necessarily means that one is desiring less profits via the broader economy, which implies that one would need to work longer to retire early.  It all ties together at the end of the day. 

I don't see the dichotomy. I prefer less spending for me, while everyone else can spend as much as they want. If fact as you point out I prefer if everyone else spend as much as possible, as this would be good for my investments (unless it's too much and the markets crash..). This isn't a cult, where the goal is to convert the whole world to our beliefs. At least not IMO. I care about me; I want to save up FU money, I want freedom to stop working. That's it. Everyone else can what whatever for all I care, which is indeed their freedom. Most middle class (and up) people in the west have this choice, so when others choose to spend wildly I assume that's what they want. It's not for me to convert them.

FIPurpose

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Re: why is deflation considered a bad thing?
« Reply #53 on: August 22, 2016, 11:41:23 AM »
I am not even a studied person as to the inner workings of inflation/deflation and macroeconomics, but I am curious.

In a world of stuff saturation, and some kind of stabilization between interest rates of -0.5% to 2%. I don't see how FIRE would become less possible. In fact, I would see it as a more visible path for many people. Stock markets would remain rather flat, and companies would shift to almost all dividends likely hovering between 2-3% (with a couple percent increase each year for productivity, though that would also eventually top out.)

With low long-term inflation (close to 0%), the stock market would stabilize with a low consistent return. Perhaps a 4% SWR will not be possible, but my guess for a still growing country like the USA is that is still several decades away.

I definitely agree with the poster that I hope the near future includes people working less (10-20 hours a week), but honestly, there are so many consuma suckas, I don't think anyone here has worries of people consuming bare necessities any time soon.

mr_orange

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Re: why is deflation considered a bad thing?
« Reply #54 on: August 22, 2016, 11:52:23 AM »
I don't think anything written above is inconsistent with what I have written and I do think we're off topic so I will be respectful to the OP and let people get back on topic. 

arebelspy

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Re: why is deflation considered a bad thing?
« Reply #55 on: August 22, 2016, 05:50:26 PM »
And there's no choice to be made. We live in the world we do. Working longer would be pointless.

I really think this is the point we disagree on.  My cynicism or lack thereof really isn't important. 

The world we live in would be materially different if everyone decided to stop working and businesses were less productive.

Sure.  It would be different if that was the case.  But it's not.  As I said:
And there's no choice to be made. We live in the world we do. Working longer would be pointless.

We don't live in that wonderful fantasy world where people don't waste, and consume.  We live in the real world, where they do. 

I can't choose to change the world.  If I could, I'd change it so I couldn't FIRE, but the world is a better place.

I don't necessarily even agree with the false dichotomy of them being mutually exclusive, especially with all the automation that's available nowadays--I think we can easily provide for people's needs with a minimal amount of labor, and without a ton of consumption.  But even if I did agree that they were mutually exclusive, there's not two worlds where I can choose which one to live in.  There's just this--very consumeristic--world.  So from a practical standpoint, I'll optimize my life for the world I live in.
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mr_orange

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Re: why is deflation considered a bad thing?
« Reply #56 on: August 22, 2016, 08:09:34 PM »
Really?  Because from my perspective you made epic statements above over a number of postings arguing that it was "disingenuous" to espouse mustachianism and expect a decent return on your investments, that people need to "choose" between mustachianism and corporate profits, and that the economy would "tank" if enough people became mustachian.  You also said that frugality is taken to "illogical extremes" on this forum.  None of those very strongly expressed opinions are consistent with my thinking and all of them seem like they were meant to provoke a response.  I suspect I would have a number of questions about the assumptions underlying those statements if they were laid bare--as it is they are just opinions thrown out into the universe that you seemed to feel the need to share on this thread--did you have a goal in saying those things?  (Like I think you said somewhere you think I should sell my index funds because I'm no longer working for a corporation or something like that?)  So that is why I said you are laying out false dichotomies.  Maybe I misunderstood you but that's how all this came across to me.  Happy to drop it here if you'd like.  Or happy to try to understand what you were saying better.   

Most of what you wrote above is stuff you made up.  If you wish to address exact quotes from my responses I'm happy to respond.  I'm not going to get into a back and forth about stuff you manufacture that I said though. 

Less in corporate profits means you work longer because your investments won't work as hard.  Less spending means less corporate profits.  More deflation means the real cost of borrowing is higher and servicing debt is harder, which means that your debt service will consume a greater portion of your earnings.  This, in turn, means that you'll be able to save less. 

It is pretty well impossible to have a meaningful conversation about these things though because people on this forum will simply ignore basic economic principles to manufacture rules consistent with their beliefs regardless of how silly the arguments are.   So yeah, it really is a waste of time. 

arebelspy

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Re: why is deflation considered a bad thing?
« Reply #57 on: August 22, 2016, 08:15:45 PM »
Less in corporate profits means you work longer because your investments won't work as hard.  Less spending means less corporate profits.  More deflation means the real cost of borrowing is higher and servicing debt is harder, which means that your debt service will consume a greater portion of your earnings.  This, in turn, means that you'll be able to save less. 

It is pretty well impossible to have a meaningful conversation about these things though because people on this forum will simply ignore basic economic principles to manufacture rules consistent with their beliefs regardless of how silly the arguments are.   So yeah, it really is a waste of time.

You're the one ignoring my point that even if all that you post is true (and there's reasonable debate about it), it still would be a better world.  ;)

Less consumption->less corporate profits->longer work time.  Okay.  I'd be willing to work a lot longer to not see us destroy the planet.

In other words, if I could have everything change, but at a detrimental cost to me personally (working longer), I'd change it in a snap.  I can't have that, so no point in working longer.

There's no choice Mustachians have to make, because we don't like in that world.  But if, over time, the world shifts to less consumption, and one needs to work a bit longer, that'd be terrific.  :)
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mr_orange

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Re: why is deflation considered a bad thing?
« Reply #58 on: August 22, 2016, 08:26:14 PM »
I don't necessarily even agree with the false dichotomy of them being mutually exclusive, especially with all the automation that's available nowadays--I think we can easily provide for people's needs with a minimal amount of labor, and without a ton of consumption.  But even if I did agree that they were mutually exclusive, there's not two worlds where I can choose which one to live in.  There's just this--very consumeristic--world.  So from a practical standpoint, I'll optimize my life for the world I live in.

If the automation was feasible then business owners would already be working feverishly to use it to streamline their operations and increase profits.  What is the true fantasy world (to use your words) is the one where magical unused automation allows people to work less and for profits to rise to afford them the ability to retire earlier.  If the technology is available and can be exploited to increase productivity absent labor it would be used.  In the current real world real people have to do real work to produce goods and services that drive profits for owners. 

I'd love to have the cake I just ate this evening too, but in the real world it doesn't work that way.  Your savings need to be invested to support projects that produce earnings so that you can afford to not work.  This requires entities (mainly consumers) to spend money.  Deflation provides incentives for people NOT to spend money and thus earnings will decrease and your FIRE plans will be more difficult to achieve. 

There is no false dichotomy.  This is the way the economy works. 

mr_orange

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Re: why is deflation considered a bad thing?
« Reply #59 on: August 22, 2016, 08:27:49 PM »
Less in corporate profits means you work longer because your investments won't work as hard.  Less spending means less corporate profits.  More deflation means the real cost of borrowing is higher and servicing debt is harder, which means that your debt service will consume a greater portion of your earnings.  This, in turn, means that you'll be able to save less. 

It is pretty well impossible to have a meaningful conversation about these things though because people on this forum will simply ignore basic economic principles to manufacture rules consistent with their beliefs regardless of how silly the arguments are.   So yeah, it really is a waste of time.

You're the one ignoring my point that even if all that you post is true (and there's reasonable debate about it), it still would be a better world.  ;)

Less consumption->less corporate profits->longer work time.  Okay.  I'd be willing to work a lot longer to not see us destroy the planet.

In other words, if I could have everything change, but at a detrimental cost to me personally (working longer), I'd change it in a snap.  I can't have that, so no point in working longer.

There's no choice Mustachians have to make, because we don't like in that world.  But if, over time, the world shifts to less consumption, and one needs to work a bit longer, that'd be terrific.  :)

Nope....didn't ignore it.  It was acknowledged above. 

mr_orange

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Re: why is deflation considered a bad thing?
« Reply #60 on: August 23, 2016, 08:23:56 AM »
Yes, invested capital needs a return on investment and the capital invested in making junk would have to be redeployed if people stopped buying plastic junk.  But a call to less consumerism among the richest portion of the world's population doesn't prima facie dictate what total corporate profits or spending would be after the "revolution".  The capital currently invested in making consumer junk could wither and die (like your scenario), could migrate to more productive fields (like providing for the basic needs of poor people in the world or producing better infrastructure), or could even become more productive if as part of this change we learn how to allocate capital better (e.g., through technology, policy, or other avenues).  Total spending is also made up of a lot more than the spending of the consumers eligible for mustachianism--it also includes businesses and governments, for examle.  I'm just doing this to unpack your first statement and show that you are making a ton of assumptions and that it is not in any way evident which scenario would go down.  The fact that you feel so sure you know what would happen kinda freaks me out.

Yes.....I am fully aware that others contribute to spending.  Hence why I referenced 70% of spending is done by consumers above.  There really is nothing to unpack.  If people stop buying stuff there are recessions.  There aren't any non-real-world assumptions.  This is the way the economy functions.  If providing for the poor or allocating capital in another fashion was somehow more profitable than the way it is currently allocated then it would ALREADY be happening.  It isn't. 

But to equate mustachianism to deflation is a giant giant leap for a number of reasons.  The first reason is the logic I go through above--you have not sufficiently proven that the wider adoption of "mustachianism" over time would decrease total worldwide spending and profits--and you will not be able to prove it because the answer to the question will depend on the policy responses to the shift and a number of other factors that involve agency.  But beyond this deflation and inflation are not just a function of spending, they depend on the supply of money and the velocity of that money, both of which are subject to forces other than consumer spending (including policy responses) so again I don't see a facile answer but multiple possibilities.  Your doomsday thinking is one possible outcome that you seem to think is a certainty. 

Again, this aligns with what I have stated above.  Your only quibble here and with the paragraph that I deleted because we were in agreement are minor expectation items.  Further, there is no doomsday scenario in any of my posts.  You are making that up to support an argument of some sort that we're not really having. 

I prefer to use my imagination.  Just to use one simple example, imagine a version of helicoptor money where every citizen receives a guaranteed minimum income as a deflation fighting policy response.  That would be great for mustachians and good at fighting deflation.  Now you'd have a minimum income as a floor and it would be even more the case that the labor you choose to contribute would not be to provide for basic human necessities but in order to contribute something meaningful or make some extra money.  That's just one example of something that could happen.  Will it happen?  I don't know.  What would be the second order and third order effects (both good and bad)?  We could think about that and it could be an interesting thought experiment. 
I guess I prefer to debate things that happen in the real world.  Other economies have systems far different than ours does.  Everyone on this board either lives in those economies or has the freedom to move to them.  The fact that they don't is pretty damning to me.  They also have the ability to deploy their capital to those economies, but instead choose to park it in index funds dominated by the companies that make up popular Vanguard indices.  You see, capital has a spooky way of getting deployed to where it is used most efficiently.  People wish for their dollars to work hard in projects that are good risk-adjusted places to park it.  Again, if the scenario you're claiming was somehow feasible the money would already be deployed in this fashion.  With hundreds of countries with different economies, value structures, policy constructs, etc. the fact that capital is not currently deployed in a fashion like what you're espousing is damning evidence that it won't work. 

Further, if the capital allocation you seek aligns with "Mustachiasm" why are there not hoards of threads discussing how to account for the social value of money and how people are accepting lower returns, working longer, etc. to make the world a better place?  I see some signs of this in certain posts, but not the multi-page back and forth threads about 3% SWR versus 4% SWR where Vanguard indices dominate the discussion. 

My tendency is to want to open up the possibilities of the future with questions, not pretend I already know all the answers... why you insist that you have the right answers and that everyone on this forum is too dumb or stuck in their ways to intelligently debate with you puzzles me.

Yup....it is pretty frustrating when people make up arguments to respond to and construct straw man items instead.  Forgive me for my frustration.  This post was far better. 

mr_orange

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Re: why is deflation considered a bad thing?
« Reply #61 on: August 23, 2016, 08:36:53 AM »
Because it's a false dichotomy.  We have great companies that make great stuff, like lifesaving technologies and efficient means of transportation.  We also have dumb companies that make dumb stuff.  To hope that we get more great companies that make worthwhile stuff and less dumb companies that make junk is not disingenuous and I'm pretty surprised you would jump to questioning Arebelspy's integrity rather than asking questions first.   

Fine.  Invest in the "great companies" then and don't be lazy and invest in indices constructed largely from companies that "make dumb stuff."  I'm not questioning anyone's integrity.  I'm questioning their decision set and whether or not it really aligns with their values.  You really can't invest your money in the companies "making dumb stuff" and then berate the benefits you receive by using the profits they generate to provide for your lifestyle.  You can't have it both ways. 

In what ways?  I literally have no idea what you mean.  Do you have examples of "illogical extremes"?  I read these kinds of statements and I think "this guy is angry" but I don't get any information content from it.  Do you see that when you make an assertion like "the whole concept is taken to illogicial extremes" without any explanation of what you mean that I can't actually glean anything or evaluate for myself whether you are right or wrong?

You're free to think whatever you want to think as am I.  I have over 600 other posts you're free to review to get plenty of insight into what I mean.  There are plenty of electrons spilled over my assertion that people would be far better off investing their time in entrepreneurial pursuits, providing for society, and investing their time in this manner than there is in cutting out a $100 cable bill.  Feel free to review those posts.  I won't rehash them all here because you're too lazy to review them. 

poorboyrichman

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Re: why is deflation considered a bad thing?
« Reply #62 on: August 23, 2016, 09:32:13 AM »
The are no right or wrong ways to handle economies, there's degree's of control ranging from laissez faire based free trade to localised protectionism. Whatever ideology our society subscribes to, there are always winners and losers, in that sense there is no right or wrong, or good or bad. Just winners and losers.

If you want to protect your wealth, which by the way in monetary sense are just tokens of exchange, you need to understand each economic theory and their applications, then try to predict how the big dogs will play their next hand. It's pretty obvious what to do in a world where the top 1% manipulate most forms of wealth for their own gain, whether it is cash, bonds gold or stocks. You need to realise that monetary wealth is imaginary and begin to invest in other forms of capital, whether that be learning how to grow food, fix and make things, own and or productive businesses etc. If society collapses tomorrow as a result of the massive bust that will follow 90 or so years of Keynesian debt fuelled economics, you don't want to be the last many standing hoping that your imaginary horde of wealth will provide for you in retirement.

Be warned, the big one is coming.


Retire-Canada

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Re: why is deflation considered a bad thing?
« Reply #63 on: August 23, 2016, 10:02:21 AM »
Be warned, the big one is coming.



Thanks for the warning. I filed it in my list of doomsday apocalypse predictions under "Stock Market Zombie Apocalypse". I assume you weren't talking about "Giant Killer Asteroid". If you could tell me which decade or century this was going to happen it would be a bit more useful.
« Last Edit: August 23, 2016, 11:52:32 AM by Retire-Canada »

DavidAnnArbor

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Re: why is deflation considered a bad thing?
« Reply #64 on: August 23, 2016, 11:24:47 AM »
society collapses tomorrow as a result of the massive bust that will follow 90 or so years of Keynesian debt fuelled economic

I see societal collapse coming not from following Keynes inspired deficit spending, but rather from the European Union's experiment in government frugality, lowering outstanding government debt. The result of this austerity in Europe is high unemployment, poor stock markets, deflation, and recession. The societal collapse part comes in the rise of right-wing national parties in France, Austria, Hungary and other European countries.

No need to be afraid of Keynes inspired deficit spending, as long as the budget deficit doesn't go up more than the combined inflation rate and the real growth of GDP - this insures the Debt/GDP ratio is constant, sustainable, and safe.

Decarbonizing consumption to stop global warming would be ideal. Anyway, some of that spending comes from intellectual and intangible consumer goods, like music, film, games, e-books. So we can still have growing consumerism, an expanding GDP, and rising stock values.


ooeei

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Re: why is deflation considered a bad thing?
« Reply #65 on: August 23, 2016, 12:27:28 PM »
Because it's a false dichotomy.  We have great companies that make great stuff, like lifesaving technologies and efficient means of transportation.  We also have dumb companies that make dumb stuff.  To hope that we get more great companies that make worthwhile stuff and less dumb companies that make junk is not disingenuous and I'm pretty surprised you would jump to questioning Arebelspy's integrity rather than asking questions first.   

Fine.  Invest in the "great companies" then and don't be lazy and invest in indices constructed largely from companies that "make dumb stuff."  I'm not questioning anyone's integrity.  I'm questioning their decision set and whether or not it really aligns with their values.  You really can't invest your money in the companies "making dumb stuff" and then berate the benefits you receive by using the profits they generate to provide for your lifestyle.  You can't have it both ways. 


I'm not sure how you think someone can't wish people didn't buy dumb stuff, yet make money when they do.  I can work at McDonald's and say "Damn, wish this 300 lb guy would eat a salad at home occasionally instead of ordering three Big Macs for lunch every day." 

I work in oil/gas. I wish the world ran on solar power and rainbows, but it doesn't, so I don't have a problem making money from what we DO have.  I also hold broad index funds, and wish people wouldn't eat junk food as often even though I own a few companies that profit off of people eating junk food. 

mrpercentage

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Re: why is deflation considered a bad thing?
« Reply #66 on: August 23, 2016, 06:51:41 PM »
psst.. Mr Orange. I will tell you a secret. Most on here are readinging your post on a tablet that is steaming through their local internets overpriced redicu-speed supablast internet. Some have a Ferrari parked next to their yacht. No vetting here man.

I have been a serious tightwad this last couple years but now all my clothes are old and I'm tired of the cookie being 20 years away. $700 in presents this month not including new shoes and Bluetooth headphones for myself

Xbox one s, pavolok, a vintage judging gymnastics book, and every single Jack Johnson CD and the music video DVD (and it's not even pirated). 😏
And I Bought the Walking Dead Michone Series for me on 360 and I'm seriously debating buying Banks and Steelz because I love the song Giants

It feels like I punched Tyler Durdan in the face. And I liked it

Telecaster

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Re: why is deflation considered a bad thing?
« Reply #67 on: August 23, 2016, 07:37:17 PM »
"There were a number of nasty prolonged slumps under the gold standard. In particular the Panic of 1893 was associated with a double-dip recession that left industrial production depressed and unemployment high for more than 5 years."
http://krugman.blogs.nytimes.com/2011/01/30/recessions-under-the-gold-standard/

Yes, there was plenty of bad things that happened economically in the 1800s.  It was a full century long.

I'm curious about what GuitarStv had in mind, especially what he referred to as "the great depression."

Sadly, there was no amazing point to be made.  I have to confess mixing up my dates on that one.  :P

Actually, you might have been right anyway.  The Industrial Revolution occurred in the 1800s, so there was of wealth created and economic growth that hadn't been seen before.  But there were also a number of brutal economic recessions and they occurred much more frequently than they do today.

The lessons of the 1800s are mostly what not to do. 

aspiringnomad

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Re: why is deflation considered a bad thing?
« Reply #68 on: August 23, 2016, 07:40:28 PM »
"There were a number of nasty prolonged slumps under the gold standard. In particular the Panic of 1893 was associated with a double-dip recession that left industrial production depressed and unemployment high for more than 5 years."
http://krugman.blogs.nytimes.com/2011/01/30/recessions-under-the-gold-standard/

Yes, there was plenty of bad things that happened economically in the 1800s.  It was a full century long.

I'm curious about what GuitarStv had in mind, especially what he referred to as "the great depression."

Sadly, there was no amazing point to be made.  I have to confess mixing up my dates on that one.  :P

Actually, you might have been right anyway.  The Industrial Revolution occurred in the 1800s, so there was of wealth created and economic growth that hadn't been seen before.  But there were also a number of brutal economic recessions and they occurred much more frequently than they do today.

The lessons of the 1800s are mostly what not to do.

+1. Most of the 1800s were horribly unstable for nearly everyone in the US, including the few who could save enough to invest.

poorboyrichman

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Re: why is deflation considered a bad thing?
« Reply #69 on: August 24, 2016, 04:03:51 AM »
@lazarus_long, My post was tongue in cheek as was aimed to get people thinking about how they can protect themselves from deflationary collapse, that is avoid relying solely on financial capital, or tokens of exchange.

Sometimes I forget about the curse of knowledge. Your world view is radically different to mine, primarily because we have been exposed to very different learning experiences. Your two attempts at discrediting my posts hint you make many assumptions about the economy and human society. Your assumptions may well be binding you to the dogma of human progress.

If you are truly interested in challenging your assumptions and understanding why a deflationary collapse is inevitable, PM me, and I will gladly share with you some excellent literature on the subject. Nothing I can say will lead you to change your mind, all I can do is give you the information and the means by which to search out your own conclusions.

It seems to me that most of the MMM forum would rather stick their fingers in their ears and pretend that everything is going to be ok rather than admit that human societies can decline and fall, just as has happened with every successful and prosperous civilization that came before our industrialised societies. A wise man takes the time to learn from the lessons of history.

Retire-Canada

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Re: why is deflation considered a bad thing?
« Reply #70 on: August 24, 2016, 05:53:31 AM »
It seems to me that most of the MMM forum would rather stick their fingers in their ears and pretend that everything is going to be ok rather than get depressed and deflected off course by various vague and unactionable doomsday predictions by people who have not established any credibility in the doomsday prediction field.

I fixed that for you. ^^^ ;)
« Last Edit: August 24, 2016, 06:56:40 AM by Retire-Canada »

arebelspy

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Re: why is deflation considered a bad thing?
« Reply #71 on: August 25, 2016, 09:08:58 PM »
It seems to me that most of the MMM forum would rather stick their fingers in their ears and pretend that everything is going to be ok rather than admit that human societies can decline and fall, just as has happened with every successful and prosperous civilization that came before our industrialised societies.

Of course that happens. 

I'm less interested in that fact than any sort of shred of evidence it'll happen in the next, oh, 50 years or so.

Say someone who was 45 in in 1970, and who said the same thing as you (all societies fall!) and acted on their assumption that the US would fall in the next 5-10 years (with increasing confidence as the Vietnam war happened, massive inflation in the 70s, then the Cold War, etc. etc. that it'll happen any day now).  And now, 46 years later, as they turn 91, they reflect back on how maybe a bit more of an optimistic outlook might have saved them.  ;)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with three kids.
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mrpercentage

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Re: why is deflation considered a bad thing?
« Reply #72 on: August 25, 2016, 09:42:42 PM »
It seems to me that most of the MMM forum would rather stick their fingers in their ears and pretend that everything is going to be ok rather than admit that human societies can decline and fall, just as has happened with every successful and prosperous civilization that came before our industrialised societies.

Of course that happens. 

I'm less interested in that fact than any sort of shred of evidence it'll happen in the next, oh, 50 years or so.

Say someone who was 45 in in 1970, and who said the same thing as you (all societies fall!) and acted on their assumption that the US would fall in the next 5-10 years (with increasing confidence as the Vietnam war happened, massive inflation in the 70s, then the Cold War, etc. etc. that it'll happen any day now).  And now, 46 years later, as they turn 91, they reflect back on how maybe a bit more of an optimistic outlook might have saved them.  ;)

I certainly was too bearish going into this summer. So since everything is dandy, I triple-dog-dare the Fed to raise. Make it half a point 😃

Chargem

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Re: why is deflation considered a bad thing?
« Reply #73 on: August 26, 2016, 03:03:02 AM »
It seems to me that most of the MMM forum would rather stick their fingers in their ears and pretend that everything is going to be ok rather than admit that human societies can decline and fall, just as has happened with every successful and prosperous civilization that came before our industrialised societies. A wise man takes the time to learn from the lessons of history.

I have a well reasoned and meticulously thought out plan for what I am going to do if human civilisation collapses: Die. If life becomes about spending all day, with no recreation time, struggling to subsist, then I am out. As this is a very low resource plan, I am 100% prepared for your fears to come true. I am also then free to allocate my resources towards civilisation not collapsing, just in case.

This is very much my plan B, I would much rather plan A of human civilisation continuing, quality of life, life expectancy etc. continuing to improve.

GuitarStv

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Re: why is deflation considered a bad thing?
« Reply #74 on: August 26, 2016, 06:46:25 AM »
It seems to me that most of the MMM forum would rather stick their fingers in their ears and pretend that everything is going to be ok rather than admit that human societies can decline and fall, just as has happened with every successful and prosperous civilization that came before our industrialised societies. A wise man takes the time to learn from the lessons of history.

I have a well reasoned and meticulously thought out plan for what I am going to do if human civilisation collapses: Die. If life becomes about spending all day, with no recreation time, struggling to subsist, then I am out. As this is a very low resource plan, I am 100% prepared for your fears to come true. I am also then free to allocate my resources towards civilisation not collapsing, just in case.

 . . . and I for one will eat your corpse for nourishment as I beat off the other savages with your sharpened shin bone and build myself a kingdom of fear ruled by my iron fist.  Fortunately all that this plan requires is that I stay fit and bloodthirsty.  It still allows me to allocate my resources towards civilization not collapsing, just in case.

:P

mr_orange

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Re: why is deflation considered a bad thing?
« Reply #75 on: August 26, 2016, 06:07:34 PM »
What you have in common with some of the other "Cassandras" on this thread is that you predict a bunch of stuff and then don't get into specifics about why you think it is true or whether you might be wrong.  Then when challenged or questioned, you don't engage with the particular challenges and questions, instead saying "nothing I can say will lead you to change your mind". 

Funny....I really think you pulled this exact technique in a roundabout way in response to my post above.  Pot...meet kettle. 

I've been super tied up this week and just logged in after several days of inactivity.  I do share your assertion that people are unlikely to change their mind much based on random ramblings from internet posts for something as loaded as social science.  We're pretty far off topic anyway and the OP is probably quite annoyed at this point.  I'll let my second attempt to bow out of this thread be my final one. 

PizzaSteve

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Re: why is deflation considered a bad thing?
« Reply #76 on: August 27, 2016, 08:56:51 PM »
Interesting thread.

Thanks to the usual suspects for interesting dialog.

Hopefully, on topic, this is an interesting article on how deflation can impact real estate wealth creating strategies.

http://www.innovativewealth.com/inflation-monitor/deflation-how-a-mortgage-can-destroy-your-real-estate-wealth/

So for me, deflation is not as scary as some are posting, as I think the information about how to live well during a possible deflationary cycle would enable plenty if jobs, productive life styles and allow for 'off the books' wealth creation. In fact MMM forums is a perfect example.  Mostly free, very valuable and doesn't require a trust fund or Ivy League education to access.
« Last Edit: April 27, 2017, 02:14:14 PM by PizzaSteve »

nobodyspecial

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Re: why is deflation considered a bad thing?
« Reply #77 on: August 28, 2016, 08:09:25 AM »
Quote
For example, one could argue Japan has been more or less doing fine during their recent decade plus period of deflation and stock market stagnation (by traditional measures).
But Japan can be regarded as essentially a retired person.
The population is old and shrinking, their economy is essentially exports, they just don't need much consumption.
Imagine if every worker was replaced by automation - Japan would be fine

The same isn't necessarily true for other countries and can't be true for the world as a whole.