Are you addicted to inflation?

SLUSK

Alot of people seem to think inflation is a good thing, especially if you are in debt. Inflation is bad, inflation is the destroyer of economies. Inflation is not even good in small doses. Here is what my hero Lew Rockwell has to say about it http://mises.org/story/2943 Are you addicted to inflation by any chance? It is not good for you.

Spudmonkey

What? How could someone possibly be addicted to inflation?

well horse

No. Inflation sucks big fat diseased donkey cock

1huge1

I don't know why you think were addicted to inflation.

It has been one of the driving forces in ruining the Irish economy over the last number of years with a huge loss in competiveness.

All the same inflation is needed for growth to some level al long as its manageable and at a low level.

This deflation spiral we have going at the moment is good in the short to improve some of our lost competiveness but I hope it doesn't go on for too much longer.

SLUSK

You are addicted to inflation because it is obvious that your economy collapses without it, but not even inflation can keep things up forever.

well horse

Spit it out son, whats so bad about inflation?

Personally, the smell of useless paper money during a period of hyperinflation gives me the horn.

Nothing like shovelling barrells of the stuff around while youre children go hungry for want of a slice of bread.

Spudmonkey

1huge1 wrote: »

This deflation spiral we have going at the moment is good in the short to improve some of our lost competiveness but I hope it doesn't go on for too much longer.

Why would we not want it to continue?? Surely we need to entice companies to locate here?

SLUSK

You are addicted to inflation because it is obvious that your economy collapses without it, but not even inflation can keep things up forever.

Spudmonkey

and the country won't collapse with hyperinflation? Besides not wanting your country to collapse does not mean an addiction to inflation! Sorry for being pedantic.. :rolleyes:

28064212

SLUSK wrote: »

You are addicted to inflation because it is obvious that your economy collapses without it, but not even inflation can keep things up forever.

Who's this 'you' you're referring to? Ireland as a whole? The people? Individuals? Might want to clarify a bit

SLUSK

If you read my post I said inflation cannot keep the economy up forever. Stagflation is coming, beware.

SLUSK

28064212 wrote: »

Who's this 'you' you're referring to? Ireland as a whole? The people? Individuals? Might want to clarify a bit

I would say the people as a whole, because inflation caused by credit expansion was the driving force behind the property boom.

well horse

SLUSK wrote: »

I would say the people as a whole, because inflation caused by credit expansion was the driving force behind the property boom.

Where are you posting these messages from, may I ask? You must not be from Ireland as you use the term "you" and not "we".

I don't expect that we are facing stagflation btw. Consumers are constantly being dripped information about how things are bottoming out and how there are "green shoots of recovery" in the US; consumer demand will begin to grow back by next year.

Spudmonkey

well horse wrote: »

I don't expect that we are facing stagflation btw. Consumers are constantly being dripped information about how things are bottoming out and how there are "green shoots of recovery" in the US; consumer demand will begin to grow back by next year.

Recovery in the US and recovery in Ireland are two very different things.

1huge1

Spudmonkey wrote: »

Why would we not want it to continue?? Surely we need to entice companies to locate here?

From a economics point of view deflation is unsustainable and can do damage in the long term, don't get me wrong I really hope the one thing we gain out of this recession is our lost competiveness.

Sand

Given a lot of the irish economy is struggling under large amounts of debt (i.e. fixed liabilities), inflation might be just the thing to reduce the impact of such fixed debt.

Deflation in Irelands situation ( see again, economy struggling under large amounts of debt) could be a bad thing as people take pay cuts but their fixed liabilities to the bank get relatively larger and larger, hindering their spending more and more.

silverharp

Sand wrote: »

Given a lot of the irish economy is struggling under large amounts of debt (i.e. fixed liabilities), inflation might be just the thing to reduce the impact of such fixed debt.

Deflation in Irelands situation ( see again, economy struggling under large amounts of debt) could be a bad thing as people take pay cuts but their fixed liabilities to the bank get relatively larger and larger, hindering their spending more and more.

there is a price to be paid either way, any attempt to inflate by the ECB will directly feed into interest rates which will cripple debtors as fast as living through a deflation where incomes and prices are under pressure.
Either way the unsustainable companies will be driven out of business as their customers are forced to pay off debts instead of running up debts on consumption items.
An inflation policy makes no sense from a logical perspective, creating more bits of paper or 1's and 0's does not increase economic activity.

Spudmonkey

1huge1 wrote: »

From a economics point of view deflation is unsustainable and can do damage in the long term, don't get me wrong I really hope the one thing we gain out of this recession is our lost competiveness.

Which can only be attained by "normal" wages.. What will do more damage in the short term is high welfare payouts which are unsustainable. If the cost of living does not come down, welfare payouts won't. Unless the government decide those on the dole should be entitled to much less then they are now which may be no harm?