Posts
October 29, 2008
Econbrowser: Deflation risk
There are plenty of things to worry about in the current economic situation. But deflation isn't one of them.
From the comments...
I repeat the bottom line, which I find incontrovertible: the Fed can, should, and will prevent deflation.
St. Louis Fed: Seasonally Adjusted CPI
July 2008: 219.102
July 2010: 217.597
That's two years of deflation.
Allowing the overall deflation in the U.S. in the 1930s and Japan in the 1990s was one quite fixable policy error.
Japan's deflation has actually been extremely modest from 1993 to 2010 (as seen here). I'd say we're giving them a very good run for the money so far. Pun intended.
February 21, 2009
Econbrowser: Deflation risk down but not out
For those of us who had been worried about deflation, that offers some reassurance that things may not be quite as desperate as we feared.
Worried about deflation? Weren't we told not to worry? Wasn't it impossible? Yep. I'm rereading that part at the top again. So where did all this desperation and fear come from?
June 20, 2010
Econbrowser: Inflation or deflation?
For the last year and a half my assessment has been that the near-term pressures on the U.S. economy were deflationary...
Holy crap! Why didn't someone warn me that an economic impossibility was occurring?
August 9, 2010
Econbrowser: From Disinflation to Deflation?
I'm not saying this particular VAR is the definitive word in how to model inflation, but I think it indicates the fact that based upon historical correlations, there is ample evidence to support the view that deflation is very possible.
From impossible to very possible in just two years does not a good trend make! In fact, it tends to make me paranoid.
Make a joke and I will sigh and you will laugh and I will cry
Too funny, lol. Sigh.
Friday: No Major Economic Releases
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[image: Mortgage Rates] Note: Mortgage rates are from MortgageNewsDaily.com
and are for top tier scenarios.
Friday:
• At 10:00 AM ET, *University of Michig...
5 hours ago
8 comments:
You know I read Econbrowser just to see what the FED type thinkers are thinking. I repsect the guy, and he is very bright, but such faith in models and interest rate manioulation makes me chuckel every time.
Totally awesome video by the way!
Wow, if I can just learn to type it would help.
GYSC,
I searched for "deflation risk" today and it was an amusing journey. Let's just put it that way.
I think they are still in denial in Japan.
Shiller had a 20 minute interview I caught at housingbubble.info (?) aka Jim the Realtor.
He said Japan's deflation was sort of on and off as ours could be as well. It may not be Great Depression mass deflation, but a slow road down.
My sources say steel prices are posssibly going up in Taiwan. Crazy. China's housing has slowed. The USA isn't growing much. Taiwan has 13% growth (they match our low interest rate which is probably the problem) but domestic demand could be that high? I wonder.
Maybe the Taiwan dollar will get a boost if they have to raise interest rates. They are pretty tough on "speculators" of course.
Coba
Coba,
I would label Japan's inflation rate over the past 17 years as relatively "stable". It mostly just hovers around 0%.
We could face this too. I certainly don't think inflation can save us. The speculators would simply pile into all the commodities at a faster pace than wages would rise. How would that help?
Perhaps Bernanke is looking at oil's response to the Fed's policies and feels a bit boxed? I would.
OT: I was reading Megan McArdle and a commenter had a really interesting c comment:
"In our search for another house to buy to rent out, we have been visiting the local county assessor’s website to learn as much as we can about the tax history of homes we have been shown, as well as vacant homes just sitting that look interesting. What we are seeing is properties with one or two years of overdue taxes. Whoever owns these homes now, it does not look like the banks or investors are paying the property taxes. Uh oh. Five years of that, and those homes unsold will face auction for back taxes on the courthouse steps. In the interim, the county will sell certificates to investors for the unpaid taxes, or try to. It’s hard to imagine such a scenario happening here and now, but in the small town where I grew up, the wealthiest families got that way buying land at the courthouse steps in the 1930s for little more than the unpaid taxes. Unfortunately, I don’t underestimate the capacity nor willingness of the wealthy to do nothing to prevent that happening again. Since some commenters in recent posts have expressed admiration for pessimism, I’ll suggest a prediction that 2014 (2009 plus five years) could be the bottom of the housing market. And also the year of the next bank bailout, because the toxic assets will finally face liquidation."
Note, after a tax auction, you don't owe the mortgage or anything else if you buy the property.
Anonymous,
Thanks for sharing that. Very interesting.
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