Inflation vs Deflation : Financial Markets
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Inflation vs Deflation

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Inflation vs Deflation [#permalink]

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05 Oct 2009, 05:33
I am surprised as to how this topic hasn't garnered any interest here. So let me start off.

What are your views....which camp do you belong and why.
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Re: Inflation vs Deflation [#permalink]

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06 Oct 2009, 23:18
What does this school means under your profile?
NY Stern, CBS, Columbia, Kelloggs
did you get accepted from all of them?
Senior Manager
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06 Oct 2009, 23:24
Haha..i wish. My target schools.

orsang8 wrote:
What does this school means under your profile?
NY Stern, CBS, Columbia, Kelloggs
did you get accepted from all of them?

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Re: Inflation vs Deflation [#permalink]

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06 Oct 2009, 23:28
I am surprised as to how this topic hasn't garnered any interest here. So let me start off.

What are your views....which camp do you belong and why.

can i belong to both camps?
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Re: Inflation vs Deflation [#permalink]

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06 Oct 2009, 23:35
Haha...actually i am in that camp. More than welcome to join.

Just like in a crucible where two opposite reactions can co-exist, we have having inflationary and deflationary pressures.

Janet Tavakoli made an compelling case for deflationists. A must read

I am surprised as to how this topic hasn't garnered any interest here. So let me start off.

What are your views....which camp do you belong and why.

can i belong to both camps?

_________________

If you have made mistakes, there is always another chance for you. You may have a fresh start any moment you choose, for this thing we call "failure" is not the falling down, but the staying down.

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Re: Inflation vs Deflation [#permalink]

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08 Oct 2009, 10:52
Haha...actually i am in that camp. More than welcome to join.

Just like in a crucible where two opposite reactions can co-exist, we have having inflationary and deflationary pressures.

Janet Tavakoli made an compelling case for deflationists. A must read

I am surprised as to how this topic hasn't garnered any interest here. So let me start off.

What are your views....which camp do you belong and why.

can i belong to both camps?

have to read Tavakoli's latest...

But, here's a good defense of the "i'm a member of the inflation/deflation double whammy combo camp":

http://www.zerohedge.com/article/guest- ... be-missing
Senior Manager
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08 Oct 2009, 18:10
Yes i read that one.

Whats your take on the sky high gold prices ? Signs of inflation on the horizon ?

Disclaimer : I am a gold bug
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Re: Inflation vs Deflation [#permalink]

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23 Feb 2010, 22:22
i remember my college days.
nice topic.
inflation means rising of prices.
and deflation
means decline of price.
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23 Feb 2010, 22:40
i remember my college days.
nice topic.
inflation means rising of prices.
and deflation
means decline of price.

more importantly, what are the causes behind inflation/deflation?

many people still don't get it right...
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24 Feb 2010, 07:52
money supply? purchasing power?

been a long time since i sat in a class lol. time to brush up for the mba next yr.
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Re: Inflation vs Deflation [#permalink]

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05 May 2010, 10:42
Not sure what the question is...

Anyway, I don't see the Fed raising interest rates anytime soon. Plus, you have all those huge sums of money that banks aren't lending out. (Well, they're lending to the Tres.) With all these "free money" in the system, sooner or later (once banks start lending), there will be inflation problems. Healthy inflation counts for 2-3% a year so if you believe in the recovery, we might see at least that.

This whole Greek/Euro fiasco has led investors in a flight to safety towards the dollar. Yields go down making it less profitable for banks to buy treasuries.

Than again, if we see a double dip, that might lead to deflation. Perhaps stagflation?

Definitely arguments for both sides.
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Re: Inflation vs Deflation [#permalink]

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19 May 2010, 05:32
There is usually a 1 year lag between monetary policy changes and these policies' effect. I belong to neither camp at the moment, I think the US had done an excellent job by injecting liquidity in the system which is being used by banks to recapitalise (instead of this money flowing into circulation).
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Re: Inflation vs Deflation [#permalink]

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09 Jun 2010, 22:25
My thoughts precisely. We are going to have a ZIRP for a long long time. Defalation is around the corner (some might argue, we are in one) and so is QE 2.0.

More money printing!

strikethree wrote:
Not sure what the question is...

Anyway, I don't see the Fed raising interest rates anytime soon. Plus, you have all those huge sums of money that banks aren't lending out. (Well, they're lending to the Tres.) With all these "free money" in the system, sooner or later (once banks start lending), there will be inflation problems. Healthy inflation counts for 2-3% a year so if you believe in the recovery, we might see at least that.

This whole Greek/Euro fiasco has led investors in a flight to safety towards the dollar. Yields go down making it less profitable for banks to buy treasuries.

Than again, if we see a double dip, that might lead to deflation. Perhaps stagflation?

Definitely arguments for both sides.

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Re: Inflation vs Deflation [#permalink]

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21 Oct 2011, 06:15
Hi dear,
Inflation is the increase in price level and the decrease in value of money.
Deflation is the decrease in the price level and the increase in the value of money.
Now a days there is a huge inflation all over the world, which is a very dangerous condition for the economy.
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Re: Inflation vs Deflation [#permalink]

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12 May 2013, 09:40
Here's my theory:

The artificial deflationary pressure that has characterized the last few years is really the result of proactive, intentional FED policy. In other words, this pressure is not the result of fundamental macroeconomic fluctuations, such as an elevated demand for money and/or a contraction in the supply of it, but is almost entirely due to the fact that the FED is paying interest on reserves and therefore constricting velocity. Their intention is to essentially 'trap' the trillions of dollars in high-powered money within the financial sector and banking system in order to (1) recapitalize failed institutions, (2) stabilize expectations, (3) reduce the pressure of growing deficits (ease crowding-out effect) and (4) stimulate the wealth effect without simultaneously elevating interest rates and causing torrential inflation.

Unfortunately for the FED, it must and will fail in this endeavor. Velocity is naturally picking up as the economy recovers and begins the re-structuring process. Once velocity rises, the trillions of dollars in high-powered money that the FED has injected into the financial system will enter circulation and prices will therefore inevitably rise. Inflationary expectations will take hold and investors will flee out of the bond market leading to a major spike in interest rates.

The FED cannot counter-act this process by pursuing a counter-inflationary policy because open-market sales will only put additional pressure on already rising interest rates, and due to collapsing bond prices, it can only succeed in sucking out a mere fraction of the high-powered money that it injected into the system.
Re: Inflation vs Deflation   [#permalink] 12 May 2013, 09:40
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