Deflation?

Is deflation a real threat to you? Or is inflation more of a concern?

Inflation, I am on a fixed income. I think inflation is relative unless you are on a fixed income.

Deflation will cause gas mileage to suffer. external_link told us that.

It is put 2 ways, either the money becomes worthless or the goods to buy become worthless cause no one has money to buy anything. Inflation above 10-15% is worse. Hyperinflation (over 100%) is very poor fiscal policy by a government. Deflation in fuel prices is great, I just wish Propain would get lower. Gasoline is now $1.99 in my area.

Both, and neither. Im ok, personally with inflation of 1 percent or so. Better than deflation of 1 percent. With deflation, commodities, including cattle and milk are worth less tomorrow than they are today. That directly impacts what my customers can pay for hay. With moderate inflation, in the 1 percent range, commodity prices tend to be pretty stable. That stabilizes fuel, fertilizer, and what we buy.

Deflation benefits you if you are a net holder of cash since it will buy more real assets after deflation. However, it's a nightmare for debtors. If you borrowed $100,000 to buy cows, real estate, put in a crop or whatever, and then the price of that asset goes down due to deflation, you still owe $100,000.

Thants why the government is printing money. Serious deflation will cause more bank loan losses and failures...

Pretty much going to see deflation. For me it would help make ag land more affordable. Unless my health fails, I should be in this business another 20 - 25 years. I can't currently compete with those who get money from inheritances, lawsuits, etc. to bid on land. Obviously, not good for those about to retire.
Alot of countries accross the world will probably go back to historic purchasing levels meaning less consumption on beans and grains lowering commodity prices.
What's unique about this downturn is certain suppliers have cartel type abilities to restrict output. We all know about OPEC, but the fertilizer dealer told me that the potassium and phosphorus suppliers have already gone to short term shutdowns to restrict supply. Nitrogen suppliers have gone from dozens (10 to 15 years ago) to under 10. Similar situation with seed companies. Gonna make for high cost to do business. Still lots of people living outside their means beyond the subprime crowd. Not good for people to finance vehicles for twice their expected lifetime (especially when they don't do the maintenance). Restricted credit might shock people back to sensible purchases. I'm not for harsh cutbacks by any means but it might make the country financially healthier in the long run.

That's exactly what happened to mom's family during the Great Depression. They were doing OK with the family farm, selling milk, eggs, etc. So at the urging of a brother who was a schoolteacher [and also a non-participating partner in the farm], the family went into debt to expand the operation [bought more cows]. They got caught with debt when prices tanked.

Grandma said they had to think twice about buying penny candy for the kids. Grandma's dad ran a grocery in a nearby town, and she said that if her dad hadn't extended them credit on the groceries, they might not have made it through the Depression with the farm.

In 1943, Grandma and Grampa sold the family farm, paid off the brothers' their share, and bought a smaller, 13-acre place five miles down the road. That's the farm that's still in the family today.

I just had dinner with a friend of mine who has a precision machining business. His biggest ( pretty much only ) customer just pushed back his orders 3 months. 3 months of no income. Not a happy guy.

Inflation is more of a concern to me, but with what Bush started before leaving office and with external_link's intention to escalate the spending spree, high inflation is just around the corner. One can only hope it wouldn't rival the double digit inflation which occured during the Carter admininstration, but I'm betting we will easily hit the double digits. Unless there is a complete monetary collapse, significant deflation is not going to occur, but if a collapse of this magnitude does occur, almost everyone is going to screwed, and a few hundred thousand isn't going to save you. Those that have learned to live on little and/or "the land", such as Old, will be more immune from the pain.

Since I am just a young guy who doesn't own much yet, I would like to see some deflation happen. I would like the cost of homes and automobiles drop down to more affordable levels. Spending in this country has been outpacing most peoples earnings for years, and thats unsustainable.

Sorry to tell you, but wage deflation is already in progress. New UAW members--yeah, the union that supposedly robs the car companies, with actual wages of about $29 an hour--will only start at $12 an hour, and won't be covered by the "old" pension plan. But for some members of Congress, like Sen. Mitch McConnell of KY, that's not enough of a pay cut.

And the folks who are unemployed now...they're in the beginning stages of wage deflation, because the guy who was making $30,000 a year at the car dealership finds that the independent shops and parts houses are paying about half that...IF they were hiring, which they're not.

Right now, banks are still carrying some of the bad loans and investments on their books ONLY because, if they wrote them off and took the loss all at once, the bank would be declared insolvent. And I'm not just talking about ONE bank, mind you.

But...if we all just turned our TV's off, everybody would have their jobs back, these foreclosures would all go away, and everything would be hunky-dory. Instantly, I'm guessing. Because there's not really a problem, the lying left-wing media is just whipping up hysteria.

Both can be bad. With the amount of currency being printed, we are going to have serious inflation in the coming months and years. US currency printing is up 70% over the last 6 months. No way whatsoever to keep that up without inflation. The government used to report the numbers on how much currency is in circulation, but they stopped a couple months ago. Gee, I wonder why they would do that?

Additionally, the FED won't release report on how much gold reserves they hold, and again they used to, but have stopped. Hmmm.

China has announced they are going to increase their gold reserves from 1600 tons to 6000 tons. Easy to see what they are thinking. And that will cause gold prices to increase dramatically.

Buy gold. You've been informed.

Deflation has already taken place in 2008, real estate being the most obvious. People with high debt which is backed by deflated assets will suffer the most and many will default. Most of them who do default will probably make any sacrifices to prevent losing their homes, just whine for goverment action. The resultant bailouts, which have already started and are sure to continue under the new administration will be a heavy burden to tax payers for many years. My two sons, now in there twenties,will probably be retirement age when and if these irresponsible actions are paid for. If I was a young man just starting out I would get a minimum wage job to be taxed on and work at anything and everything on the side for cash money to make a living.

Deflation is more concern right now. Price I'm paid for milk "deflated" $3.00/cwt Nov. to Dec. I hear that it will "deflate" $2-3 more in Jan. and Feb.

In my country thats illegal.