deflation.

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How come the price of anything never really goes down? Like bread is always like $3, let's say. On 1910 it was probably $.10. What do we need to do to get the price back down to that?
 
Price deflation occurred after all major busts up until the Great Depression (it happened during good economic times too, however), which led many economists and policymakers to believe that price deflation is bad for the economy (the rationalization is something along the lines of: if people expect prices to go down, no one will buy anything since it's cheaper in the future, therefore trade and wealth diminishes. Yeah, it's kinda odd). That's why the FED since the 70s (or something like that) has had as one of its missions to keep the CPI at around 3% annual increase by expanding the monetary base, so that decreasing prices are safely avoided.

If the quantity of money were stable or falling while the amount of consumption goods increased, all else equal, the price of goods in terms of money would decrease.
 
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uberrogo said:
How come the price of anything never really goes down? Like bread is always like $3, let's say. On 1910 it was probably $.10. What do we need to do to get the price back down to that?
Click to expand...

Counterfeit your own money. Problem solved.
 
manatee said:
Price deflation occurred after all major busts up until the Great Depression (it happened during good economic times too, however), which led many economists and policymakers to believe that price deflation is bad for the economy (the rationalization is something along the lines of: if people expect prices to go down, no one will buy anything since it's cheaper in the future, therefore trade and wealth diminishes. Yeah, it's kinda odd). That's why the FED since the 70s (or something like that) has had as one of its missions to keep the CPI at around 3% annual increase by expanding the monetary base, so that decreasing prices are safely avoided.

If the quantity of money were stable or falling while the amount of consumption goods increased, all else equal, the price of goods in terms of money would decrease.
Click to expand...

The curse of a comsumerist society.
 
uberrogo said:
How come the price of anything never really goes down? Like bread is always like $3, let's say. On 1910 it was probably $.10. What do we need to do to get the price back down to that?
Click to expand...

Comments:

When bread was $0.1 as opposed to $3 it cost WAAAY more of peoples income proportionately
If you take in your currency and reissue at a 30 to 1 ratio the price of bread hasn't changed relative to income - a common failed strategy for failed fiat currencies, e.g. Zimbabwe.
 
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The US has a failed fiat currency. There is simply no way that it can ever pay off its debts

This means there will have to be some sort of debt jubilee or a write down of the value of eveyones money to cover bankers losses, which would involve a bank holiday where accounts are frozen and when they are unfrozen the money you had in there will be worth less (have less purchasing power)

Nows the time to have tangible assets not money. Besides low interest rates are hammering savers

Here's an interview with Warren Pollock on the Keiser Report where he discusses the option of a bank holiday at about 14:10 (specifically at 25:00)
http://rt.com/programs/keiser-report/episode-238-keiser-report/

As he says the other option is to work out the financial discrepancies by going to war and it does look like the US is heading for a clash with Iran. Pretty nasty huh...making the Iranians pay for the criminal activities of the US banking fraternity and the corrupt politicians who have supported it?
 
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