Bogus analogycieldumortMarch 19 2009, 19:42:40 UTC
Bunk: According to his work, we are basically in a repeat of the 70s stagflation crisis rather than a repeat of the 1930s depression because of the huge price (primarily housing) inflation we have been through is now deflating in a way similar to the early 1980s.
Re: Bogus analogycieldumortMarch 19 2009, 19:58:59 UTC
your three month t-bill is the give-away
During the situation in the mid to late 70s and into the 80s, we were wanting to create disinflation.. we needed to create demand destruction and the Fed did so (by manufacturing two recessions: one very brief, the other pretty long).
The opposite is true today: We need to create demand, not demand destruction. We really need to see a little inflation... not disinflation. And the Fed is now trying to manufacture both demand and inflation (via quantitative easing and ZIRP)
Re: Bogus analogycapthekMarch 19 2009, 20:11:32 UTC
Thanks.
What I don't understand is that we had high inflation in the 70s and a stagnant economy in which prices would not decline. I feel like we are kind of in the same boat but we are "lucky" because prices are indeed going down, but why didn't they in the 70s?
Is it because inflation, as I see it, was mostly in the housing/credit/debt area which is easier to deflate on it's own? I mean, the dollar was also consistently falling for quite a while against other currencies until kind of recently, which is another form of inflation right? So I still see all kinds of inflation in our recent past, yet it was in forms that seemed more able to reverse direction. What do you think about that?
Comments 5
According to his work, we are basically in a repeat of the 70s stagflation crisis rather than a repeat of the 1930s depression because of the huge price (primarily housing) inflation we have been through is now deflating in a way similar to the early 1980s.
Debunked:
( ... )
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Reply
During the situation in the mid to late 70s and into the 80s, we were wanting to create disinflation.. we needed to create demand destruction and the Fed did so (by manufacturing two recessions: one very brief, the other pretty long).
The opposite is true today: We need to create demand, not demand destruction. We really need to see a little inflation... not disinflation. And the Fed is now trying to manufacture both demand and inflation (via quantitative easing and ZIRP)
Reply
What I don't understand is that we had high inflation in the 70s and a stagnant economy in which prices would not decline. I feel like we are kind of in the same boat but we are "lucky" because prices are indeed going down, but why didn't they in the 70s?
Is it because inflation, as I see it, was mostly in the housing/credit/debt area which is easier to deflate on it's own? I mean, the dollar was also consistently falling for quite a while against other currencies until kind of recently, which is another form of inflation right? So I still see all kinds of inflation in our recent past, yet it was in forms that seemed more able to reverse direction. What do you think about that?
Reply
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