Deflation, that is such a strange word, I keep hearing it over and over, some kind of buzz word for our hard times, so I looked it up. (Yes, boys and girls, contrary to popular belief we do have a dictionary, word checker and I suppose sense of humor?) Here it is:
de·fla·tion [di fláysh'n] n
1. collapse because of air loss: the releasing or escaping of air or gas from something, resulting in its shrinking or collapsing
2. loss of self-esteem: a sudden loss of confidence, self-assurance, or conceit
3. economics reduced economic activity: the reduction of general economic activity, including lower prices and a reduced supply of money and credit
4. geology erosion: the erosion of land by wind
Encarta ® World English Dictionary © & (P) 1998-2004 Microsoft Corporation. All rights reserved.
So having that firmly locked down and in place, I will continue.
Yesterday I saw a man standing at a convenience store, and using a cellphone, he was taking a picture of the marquee that had a low price for fuel displayed ($1.62 per gallon). Evidently wanting some kind of marker or visible proof to tell someone else that prices were indeed good in Oklahoma.
That is the way we are, when we have it good, “we like to rub it in” and make everyone else miserable. It is the American Way.
Two months ago when all time records were being set and the price of everything was going thru the roof, food, utilities, gasoline, I was pretty sure that deflation as they call it would not happen. Now I am not so sure, it appears that the threat could indeed be real.
Now I can hear you, sitting there and saying to yourself, “So what?” (bought any pot roast lately?)
Wide spread lower prices might sound like the panacea that we all desperately seek, the heavenly pot of gold at the end of the rainbow, but if you remember, the Great Depression was also a time of deflation. Starting in 1929 prices began dropping, and because consumers expected further declines, they stopped spending money. Spending in this country literally collapsed and nothing, absolutely nothing, was selling. Apples were being sold on every street corner in America for a nickel, but no one had the nickel.
By 1933 factory output in the country had fallen some 40% and employment topped 25%. Now if you compare times then and what is occurring in our country today, you see a definite parallel. Car sales are plummeting, the jobless ranks are swelling, soup kitchens (public relief) are on the rise, If we continue on this precarious path, a more serious problem will occur with further price or spending decreases.
Companies in America will continue to owe on their debts, but with prices lower and revenues down, they’ll have a much harder time paying them off. When a company can no longer meet its obligations, it shuts back, it lays off workers. As prices fall, consumers, like the guy with the cellphone, will stop buying. That is why so many banks, and the Fed, are rushing in with bucket loads of money, trying to encourage spending.
Be careful for what you wish for.
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Note the words “lower prices and a reduced supply of money and credit.” While credit may have been reduced to pay for the mortgage madness on Wall Street and SOME prices may be a little lower, there is no shortage in the supply of money. Under Bush’s budgets our national debt has increased 4.8 trillion dollars, or 83%, and there is still 10 more months of Bush’s last budget. Another way of looking at it–45 cents of every dollar owed by the U. S. Government was borrowed in the last 7 years, 2 months.
Our government spent every dollar it received in taxes plus 4.8 trillion more. Now, with the economy slumping, tax revenues will be down since losses reduce the amount of taxes owed which will result in even more borrowing. The money that is borrowed comes from the Federal Reserve (a group of private banks, NOT a federal agency). The Fed creates this money from thin air, loans it to the government, then charges it interest on the loans. Nice racket, huh?
The bottom line is this: Money is being created at a record rate and spent by Uncle Sam. All of these dollars will be chasing the same number of goods and services or perhaps even less as manufacturing slows. Inflation in the supply of money has ALWAYS resulted in inflation in prices, which the government likes because greater prices=greater profits=greater tax revenues! So don’t worry too much about deflation. That’s the government’s job and they are good at correcting it.
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There you go, putting up all that stuff that makes sense. DON’T YOU KNOW THIS IS THE COMMENTS SECTION! It is nice to know that someone reads this stuff … Can I borry a buck, I will pay you back on the 12th (of never).
You ever hear the story of Chuck? Young Chuck, moved to Texas and bought a donkey from a farmer for $100.00. The farmer agreed to deliver the donkey the next day. The next day he drove up and said, ‘Sorry son, but I have some bad news the donkey died.’ Chuck replied, ‘Well, then,just give me my money back.’ The farmer said, ‘Can’t do that. I went and spent it already.’
Chuck said, ‘Ok, then, just bring me the dead donkey.’ The farmer asked, ‘What ya gonna do with him? Chuck said, ‘I’m going to raffle him off.’ The farmer said, ‘You can’t raffle off a dead donkey!’
Chuck said, ‘Sure I can. Watch me. I just won’t tell anybody he’s dead.’ A month later, the farmer met up with Chuck and asked, ‘What happened with that dead donkey?’ Chuck said, ‘I raffled him off. I sold 500 tickets at two dollars a piece and made a profit of $898.00.’ The farmer said, ‘Didn’t anyone complain?’ Chuck said, ‘Just the guy who won. So I gave him his two dollars back.’
Chuck grew up and works for the Bush Administration.
Comment by James W. — November 20, 2008 @ 9:59 AM
Grabbing my cell phone to delete the picture I took of the $1.64 gas I got the other day. Never mind the fact that the price included the 20 cent a gallon “discount” from my Safeway card. And I wasn’t going to send it to anyone. Nope … I think I was going to put it on my blog. But now I can’t. So you tell me what I’m supposed to talk about tomorrow! :P
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Oh Debbie, what can I say? Beat you to the punch huh? You have to get up early if you want to uh, uh …. eat some Oatmeal. Happens to me all the time, finishing up a piece today and I go over to Margaret & Helens and they are talking about “Health Care” after I just put down something on Health Care. (I am running it anyway). As for tomorrow, who can say about tomorrow, do as I do.
1. Write.
2. Write.
3. Write often.
4. Write about anything.
5. Write about everything.
6. Write about what you see
7. Write about what you learn.
8. Write about what you think.
9. Write about what you read.
10. WRITE!
Do this daily, faithfully, and who knows … You too may have a half-million people show up to just tell you … Your blog Stinks!
Have a great day sis
Comment by Debbie — November 20, 2008 @ 11:52 AM
And since your blog won’t allow my URL … it’s http://www.buzzinby.com. See, there is always a way around a problem! I don’t get the options to leave my email or url – but it picks up my name and picture from WordPress. Ack. I’m heading out right now – so I’ll have to see if I can figure this out later.
Margaret & Helen … I think I’ve heard of that. I’ll have to check them out.
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Debbie when you “first came onsite” and left a comment, it specifically asked you for the URL that is the way it is set up. Each “first time respondent” is asked for a URL. Now it is using that “cookie” where you didn’t fill in the data to identify you and therefore it is not automatically listing a pingback to your site. I believe the only way you can correct this is to identifiy that cookie on your machine, remove it, and then come back again as a first timer and start the process all over. Not all that hard to do, just finding the right cookie might be a problem. I am not a techno-geek so it could be something internal in YOUR machine too. But that is the way it works.
Comment by Debbie — November 20, 2008 @ 3:25 PM