Dromedary Posted January 14, 2014 Share Posted January 14, 2014 Inflation down to 2% http://www.bbc.co.uk/news/business-25726621 With the inflation rate falling to a managable level and growth turning upwards more, it looks like we are well on track for a decent sustained recovery. I can of course just hear the howls of derision from the usual suspects, but I notice they were very quiet about this good news, noticed that they totally ignored the uncomfortable cold weather thread.... Funny that. Almost like they don't want good news. It goes down by 1 tenth of a percent in one month and that's good news? We were promised a bumper harvest of cheap apples etc because of the weather. Strange as my gas and electricity prices rose several percent so is that also part of this good news? Just wait till later this year when the farmers will probably announce that because of the floods veg and grain prices will have to rise. Link to comment Share on other sites More sharing options...
Supertramp Posted January 14, 2014 Share Posted January 14, 2014 It goes down by 1 tenth of a percent in one month and that's good news? We were promised a bumper harvest of cheap apples etc because of the weather. Strange as my gas and electricity prices rose several percent so is that also part of this good news? Just wait till later this year when the farmers will probably announce that because of the floods veg and grain prices will have to rise. I think you've misunderstood too, prices are still going up but by a smaller amount. Prices going down (deflation) is generally bad for an economy. Link to comment Share on other sites More sharing options...
Jason Bourne Posted January 14, 2014 Share Posted January 14, 2014 I think you've misunderstood too, prices are still going up but by a smaller amount. Prices going down (deflation) is generally bad for an economy. And there's the problem - my problem. I may be of limited intelligence, but why is it that anything GOOD for the economy, such as mass immigration of wretched Eastern Europeans who are happy to work for slave-labour wages, or the government bailing out the banksters, is generally BAD for society? Why are lower prices BAD for the economy, when they're of obvious benefit to everyone? Should everybody start shopping at Waitrose instead of Asda? Link to comment Share on other sites More sharing options...
Cyclone Posted January 14, 2014 Share Posted January 14, 2014 I can think of one reason that deflation is bad immediately. It encourages everyone to stop spending. If your money will buy more tomorrow, why buy today? And that stops the flow of money around the system, causing liquidity problems and harming the economy. We'd probably need to distinguish between structural deflation and the cost of goods falling due to increases in efficiency and new technology, but here's a more in depth answer; http://krugman.blogs.nytimes.com/2010/08/02/why-is-deflation-bad/?_r=0 Google can provide you with many more. Link to comment Share on other sites More sharing options...
Obelix Posted January 14, 2014 Author Share Posted January 14, 2014 And there's the problem - my problem. I may be of limited intelligence, but why is it that anything GOOD for the economy, such as mass immigration of wretched Eastern Europeans who are happy to work for slave-labour wages, or the government bailing out the banksters, is generally BAD for society? Why are lower prices BAD for the economy, when they're of obvious benefit to everyone? Should everybody start shopping at Waitrose instead of Asda? If the prices are falling then people tend not to spend unless they absolutely must, because you can get it cheaper in a few months, because prices are falling right.... As a result people stop spending money and the economy slows down and stagnates. Japan lost an entire decade of growth and then some due to this phenomena. Low prices for a good are always a good idea individually, but the certain promise of low prices in the future is a different kettle of fish altogether. Ideally you want inflation to be about the same as population growth, asssuming you have positive growth. Link to comment Share on other sites More sharing options...
Cyclone Posted January 15, 2014 Share Posted January 15, 2014 What would be the downside of zero inflation, a perfect balance? Link to comment Share on other sites More sharing options...
SpikeMac Posted January 15, 2014 Share Posted January 15, 2014 The inflation rate is the measure of prices - by definition you cannot rise prices over the inflation rate because that is the inflation rate... That rather depends upon how you define inflation. A short and simple primer. Pick your measure. Link to comment Share on other sites More sharing options...
Mr Bloke Posted January 15, 2014 Share Posted January 15, 2014 You are never out of the tunnel - there are always challenges ahead because everyone else in the world is trying to climb further up the pole as well.. :hihi: You do talk some rubbish... ... so are we the only ones in this tunnel? ... or is this pole also in the tunnel with us? ... and if we're all in this tunnel together, surely this pole couldn't possibly be large enough to accommodate everyone in the world? ... and what about the people with vertigo? What do they have to say about all this? I don't think you've thought this through very well at all... Link to comment Share on other sites More sharing options...
Manlinose Posted January 15, 2014 Share Posted January 15, 2014 it's either a tall tunnel or a short pole Link to comment Share on other sites More sharing options...
truman Posted January 15, 2014 Share Posted January 15, 2014 What would be the downside of zero inflation, a perfect balance? Wouldn't it make the value of your debts higher? For example,if I borrowed 10k 3 years ago..the same 10k now would be worth maybe 9k so cutting the real amount I owe...whereas with zero inflation this wouldn't happen..I know what I'm trying to say but having a spot of bother explaining it.. sorry.. Link to comment Share on other sites More sharing options...
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