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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (109450)	1/4/2015 10:10:40 AM
From: carranza2	1 Recommendation Recommended By Paxb2u Read Replies (1) \| Respond to of 217865

On a macro scale, deflation is problematic because goods, commodities, etc., which are sold for income realize lesser prices. Income as a whole declines, but debt does not. The value of debt increases beyond its value when incurred. In heavily indebted economies, i. e., the entire global spectrum because debt has grown enormously everywhere, the effects are disastrous. In economies dependent on commodities, the effect is made worse, witness what the deflation in oil prices is doing to Russia, Venezuela, Brazil, etc. Pile on the upsurge in the value of the USD, in which a huge amount of this globally incurred debt is denominated, debt which the greedy took on because they saw no consequences to low USD interest rates, and the effects of deflation can easily be seen as disastrous. Your views are wrong (or only partly correct) because you confuse macro and micro effects. The macro effects of deflation are huge, hitting a wide swath of the population via decreased incomes, unemployment, foreclosures, etc. A well positioned person, a tiny minority, e. g., Mq, C2, TJ, can do very well because possessing lots of cash, and especially the USD, presents terrific opportunities in a deflationary environment. But that is definitely the micro exception as the vast majority of the world's population is (and will be) very much hurt by deflation. To put it simply, if J6P or Juan Perez has no money, lost his job, etc. thanks to low prices, it doesn't much matter to him that prices are lower. He cannot buy. Deflation, in a word, destroys demand.