tag:blogger.com,1999:blog-8507267003129255315.post7615325152024101652..comments2024-02-05T01:08:25.857-08:00Comments on Krazy Economy: DeflationC.W.http://www.blogger.com/profile/16478139107745117649noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-8507267003129255315.post-72789636920291791862010-07-06T12:49:07.618-07:002010-07-06T12:49:07.618-07:00Thank you for your response, Michael. Going in re...Thank you for your response, Michael. Going in reverse order, I don't know of any reason why an inflation would be needed to lead into any kind of deflation. In our circumstances, we have had inflation for a long time. Since 1982 our money supply has grown by a factor of 10. We have seen constant increases in prices, especially in certain areas like health care, and two asset booms in the last 12 years. So we have had inflation. Yes, deflation would make units of our currency have a higher purchasing power (as said in the text). A low interest rate would be very positive during a deflation (watch out for income taxes!).<br /><br />My post is not intended to suggest that deflation is going to happen, only that it is a fake issue. Ben Bernanke has sworn that he will not let deflation occur. According to what he has said publicly in what is called the "Helicoptor Speech", he is willing to do amazingly stupid things to keep deflation from happening. Inflation and even hyper-inflation is still more likely. Falling prices, as the housing market is doing, would be much better for us.C.W.https://www.blogger.com/profile/16478139107745117649noreply@blogger.comtag:blogger.com,1999:blog-8507267003129255315.post-32332218642168613162010-07-05T07:16:59.038-07:002010-07-05T07:16:59.038-07:00Great post. What about an elderly person who has a...Great post. What about an elderly person who has a 401k north of $40,000 and is worried that a hyper-inflation will render that money worthless. My advice would be to invest it in secure accounts, like cash accounts with really low interest and maybe put a few thousand into gold and silver stocks. Isn't it true that a deflation would made that money worth more? Isn' it also true that before a deflation happens we'd have to experience an inflation first?michael neibelhttp://mikeseyes.blogspot.comnoreply@blogger.com