Talk:Deflation

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Removed

- The next, and possibly largest example of deflation, started in 2008 in the United States and may continue for some time.

I removed the above. It didn't belong in the "Causes of Deflation" section. And, while it might turn out to be true, is fairly speculative at this point (Oct. 2, 2008). The current situation is as likely to result in inflation as deflation, if you ask me. —Preceding unsigned comment added by Cbare (talk • contribs) 20:45, 2 October 2008 (UTC) Fair enough... debt deflation might occur, but I think we're in for a huge correction. - princeton student —Preceding unsigned comment added by 140.180.159.76 (talk) 00:30, 3 October 2008 (UTC)[reply]

I doubt that we're going to experience inflation. What is currently occurring is a destruction of credit, which is shrinking the monetary base and reducing monetary velocity, while also creating demand destruction. That is all deflationary. As fund managers panic and try to raise capital they are liquidating everything, causing huge declines on the stock market, declines in commodity prices, flight out of corporate paper and into treasuries, etc. The dollar is also strengthening against most other currencies other than the Yen (unwinding of the carry trade). And when we look at the stock market, we can interpret this as the market being repriced in terms of more scarce dollars. Similarly, money to buy housing has contracted, so the prices of housing is being repriced (downwards) to reflect the cost of a house in deflated dollars. On the other hand, the next phase of this may be an epidemic of currency crises as other currencies collapse (Iceland being only the first to fall) as capital flees out of emerging economies and into US treasuries. A lot of Austrians are convinced that the US currency must now fail, but I think that is based on religious beliefs rather than sound economic observations. And while we're pumping in $700B, we've destroyed about $5.4T in market value in the Wilshire 5000 and another $3.6T in value of housing which is getting magnified by deleveraging. And who knows how many trillions have evaporated in other areas of the economy that I don't know anything about... Lamontcg (talk) 07:45, 8 October 2008 (UTC)[reply]

Deflation is not a falling of prices

Deflation is not a falling of prices. It is a revaluation of a states monetary unit. A falling of prices is simply an effect of deflation. The opening line is therefore plain wrong, and needs to be changed. "Deflation is a contraction of the money supply......An effect of deflation, and how it is often measured, is a general falling of prices." Im no english major, so the wording my not be right, but I am an economics major, and this page is wrong - plain and simple. —Preceding unsigned comment added by 130.207.180.81 (talk) 02:50, 5 December 2007 (UTC)[reply]

So, what you're saying is that prices aren't falling, rather it is the currency's value rising, right? Is there a difference? DOR (HK) (talk) 02:13, 5 June 2008 (UTC)[reply]

Claiming that deflation is not falling prices and is a symptom and not a cause is not NPOV, it is very definitely an Austrian POV. It might be more NPOV to state something like "deflation is observed as falling prices and that the causes are debatable", but the determination of if there is deflation or not is not via watching the currency exchanges or quantity of money, but through watching prices. Even if the root cause is elsewhere, the way it is defined is by falling prices. Lamontcg (talk) 07:53, 8 October 2008 (UTC)[reply]

Britannica Concise Encyclopedia would disagree entirely - "Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. Attempts are sometimes made to bring on deflation (through raising interest rates and tightening the money supply) in order to combat inflation and slow the economy. Deflation is characteristic of depressions and recessions." This clearly defines deflation as declining prices caused a reduction in volume of credit or money. Declining prices from other causes are not deflation so this not "debatable" 68.14.92.82 (talk) 19:35, 4 December 2008 (UTC) vedder110[reply]

Though I'm not an economist, I agree with Lamontcg. I think that credit companies are defrauding customers. It should be made unlawful to not make sure that the ignorant consumer signs a credit contract without knowing its honest terms in plain, all-inclusive language. User:pahawkowl/pahawkowl (User talk:pahawkowl/talk) 15:37, 13 November 2008 (EST)

When deflation happens

Deflation basically happens when production of goods and services grows faster than the amount of money available (or the amount of money shrinks faster than production).

- In the late 19th century the money supply (gold) was relatively fixed while the Industrial Revolution brought a huge increase in the amount of goods available.

- In the Great Depression the failure of businesses and banks, and stricter government regulations, caused a drastic decline in lending, contracting the money supply.

- In Japan in the 1990's the decline of the stock market and real estate decreased banks assets, causing them to also decrease lending.

This is from the Monetarist ( http://www.wikipedia.org/wiki/Monetarism ) point of view, but it seems simpler yet more effective to me in explaining these examples than the theories in the main article.

 --Tom Tulinsky Culver City, CA, USA tomtul2@yahoo.com

Deflation can also occur if monetary velocity slows, and you need to talk about money in much broader terms as purchasing power and aggregate demand to really be more accurate. If everyone hides their money under their mattress and hordes it, there will still be deflation even though the monetary supply might expand. Falling asset values can also lead to less of a 'wealth effect' which contracts purchasing power due to decreasing ability to use collateral to get loans and just due to psychological factors (so declining housing values can lead to less consumer spending directly and not just via bank asset sheets). So your simple explanations are not NPOV, there's considerable debate. Lamontcg (talk) 08:04, 8 October 2008 (UTC)[reply]

Requested move

The following discussion is an archived discussion of the proposal. Please do not modify it. Subsequent comments should be made in a new section on the talk page. No further edits should be made to this section.

The result of the proposal was move the page, per the discussion below. It seems that the economics term is the primary topic here, and there's not currently an encyclopedia article on the deflation of tires and lifejackets, if there's one to be had. Dekimasuよ! 14:44, 13 October 2007 (UTC)[reply]

Deflation (economics) → Deflation — Deflation is simply a redirect to Deflation (economics), and there is no other article named like "Deflation (XXXXX)". There is no need to disambiguate. —supernorton 11:18, 8 October 2007 (UTC)[reply]

Survey

Feel free to state your position on the renaming proposal by beginning a new line in this section with *'''Support''' or *'''Oppose''', then sign your comment with ~~~~. Since polling is not a substitute for discussion, please explain your reasons, taking into account Wikipedia's naming conventions.

Support "Deflation" is primarily an economic term--Victor falk 13:11, 8 October 2007 (UTC)[reply]
Support. Though the term is centred around the physics term, a google search and the "what links here" on the page will give you a clear indication as to the consensus of which is the more commonly used term. We simply then create "Deflation (disambiguation)" or just bad out directly to the physics term (if they even exist) and add the link to that from this page. The logistics are easy to figure out. The fact is, this is over 95% of the use of the term which more than qualifies it to occupy the non-disambiguated term. --linca linca 03:39, 9 October 2007 (UTC)[reply]
Oppose: Many things other than economies can deflate: tyres, balloons, gas cylinders, inflatable lifejackets, inflatable boats, etc. Anthony Appleyard 10:44, 13 October 2007 (UTC)[reply]

Comment all of these cases are subject to the same type of deflation, which is physics, and as I indicated, the account for less than 5% cumulatively of the links directed to the non-disambiguated page. --linca linca 10:48, 13 October 2007 (UTC)[reply]

Discussion

Any additional comments:

Comment deflation is clearly a physics term, as the opposite of inflate, and where the economics term derives from. 132.205.44.5 03:30, 9 October 2007 (UTC)[reply]
- Comment THough that may be the case, the antonym page, Inflation is about the economic term also, not the physics term. Plus, we're not in a habit of merging meanings on one page. That's what Uncyclopedia is for. --linca linca 03:48, 9 October 2007 (UTC)[reply]

The above discussion is preserved as an archive of the proposal. Please do not modify it. Subsequent comments should be made in a new section on this talk page. No further edits should be made to this section.

…4:32 p.m. e.s.t. If deflation has something to do with Commonities and or Product then could Individual people represent the same Matter cause, more of one thing and not enough of the other.

Ok Go Haed Carry on with that i would like to capture some responce from an economical standard point of view.

D.G.Del_Dorchester Mass when and where does what happen 4:35 P.M. E.S.T.David George DeLancey (talk) 21:36, 18 March 2008 (UTC)[reply]

wgBold text —Preceding unsigned comment added by 118.95.63.95 (talk) 10:12, 9 September 2008 (UTC)[reply]

autoarchive

Discussion here very old, I am establishing an autoarchiver and archivebox.--Gregalton (talk) 08:49, 8 October 2008 (UTC)[reply]

Deflationary spiral

I merged "deflationary spiral" with "deflation", redirecting the old entry, as they are obviously the same issue, and thus do not require two separate (and potentially confusing) entires. --TallulahBelle (talk) 18:55, 22 November 2008 (UTC)[reply]

Economics box

Any way to make the economics box on the right a little narrower? On my screen it takes up most of the width of the page.

WriterHound (talk) 09:24, 24 November 2008 (UTC)[reply]

Deflation v Décroissance

There appears to be no mention of décroissance and thus a neutral point of view is not given. That growth is good is not accepted by many. Not least from a Green political perspective. The article should be written with this in mind to make it neutral, or at least a critique where deflation is a good thing rather than always a problem. As there does not seem to be a good link in the english wiokipedia i have added a link to the french wikipedia. Perhaps someone that understands economic theory and an ecological perspective and french can look through to bring these aspects in? The English Décroissance article woudl alse need rewrtting as at the moment its "degrowth" is a bad translation of décroissance. I suggest using the french term as its more accurate. —Preceding unsigned comment added by 92.16.131.114 (talk) 21:42, 23 December 2008 (UTC)[reply]

If deflation is such a big problem

If governments are so scared of deflation why dont they just counteract it by switching on the printing presses to increace the money supply and therby return the economy to an inflationary state ? 213.40.217.126 (talk) 22:58, 5 December 2008 (UTC)[reply]

See liquidity trap and google for articles on that. Intuitively, put a different way, if all consumers (holders of money) believe the value of money tomorrow will be greater than it is today (deflation), they will not spend, but hoard that money. How you break out of that expectation requires, umm, unorthodox approaches - it is insufficient to print too much money today, there has to be a commitment to print too much money for a very long and extended period. (This is a vast over-simplification, of course - see Krugman's writings on Japan and the liquidity trap for a much better explanation).--Gregalton (talk) 08:48, 6 December 2008 (UTC)[reply]

To stabilize the economy under deflation the nominal values of all constant real value non-monetary items in the economy have to be decreased in line with the increasing real value of money and in line with the decreasing general price level. That means that salaries, capital, taxes, etc all have to be decreased monthly in line with deflation. Workers will not want to have their salaries decreased monthly and companies and banks will not want to have their capital decreased monthly and the government will not want to decrease taxes monthly to keep the economy stabilized even though that is what is needed. In the markets all market prices will decrease as the markets adjust to deflation automatically as a result of the market process.

If companies and banks follow International Financial Reporting Standards and change to the Constant Purchasing Power Accounting model instead of the current very destructive Historical Cost Model, then the deflationary economy will automatically stay stabilized as salaries, capital and taxes will automatically be decreased in line with deflation and prices as a result of the CPPA model as authorized in IFRS and it will be easier for monetary authorities and the governement to get the economy out of deflation back into very low inflation till we know how to run our economies at zero percent inflation. Obviously the CPPA model as authorized in IFRS will also stablize the real or non-monetary economy under inflation. Unfortunately not a single accountant of all the millions of accountants all around the world who implement IFRS chooses the CPPA model as authorized in IFRS except when they implement IAS 29 under hyperinflation as required by the IASB. Constant Purchasing Power Accounting does not even appear in Wikipedia although it has been authorized since 1989 by the IASB. The very destructive Historical Cost Accounting model and the imensely destructive Historical Cost concept have lots of exposure in Wikipedia.—Preceding unsigned comment added by PennySeven (talk • contribs) 10:49, 6 December 2008 (UTC)[reply]

PennySeven (talk) 10:52, 6 December 2008 (UTC)[reply]

Bernanke quote in "Effects of Deflation" section

I integrated the Bernanke quote into the flow of the article, but I don't actually see the point of having it there. It is from a talk he gave in 2002 where, among other things, he said this: "I believe that the chance of significant deflation in the United States in the foreseeable future is extremely small, for two principal reasons. The first is the resilience and structural stability of the U.S. economy itself. Over the years, the U.S. economy has shown a remarkable ability to absorb shocks of all kinds, to recover, and to continue to grow. Flexible and efficient markets for labor and capital, an entrepreneurial tradition, and a general willingness to tolerate and even embrace technological and economic change all contribute to this resiliency. A particularly important protective factor in the current environment is the strength of our financial system: Despite the adverse shocks of the past year, our banking system remains healthy and well-regulated, and firm and household balance sheets are for the most part in good shape." We now know that most of that is remarkably naive (never mind recent media hype about whether or not we are facing deflation now). So, we have a quote from a naive talk about how to solve deflation placed in a section on the effects of deflation. It doesn't seem to add anything, either. Thoughts? 145.116.8.66 (talk) 17:02, 21 December 2008 (UTC)[reply]

I do not think it should be part of the article except in a historical context. We all make mistakes and learn all the time. This is a work in progress.PennySeven (talk) 17:26, 21 December 2008 (UTC)[reply]

This article is incompetent

Was this article about Deflation as well as the one about Inflation written by a student of Ben Bernanke? If so it is completely off as are the academic theories of Mr Bernanke. His theories are biting dust when faced with reality and particularly the Deflationary one. References to some books that are wrong don't make this article right. Deflation is about monetary base, not prices. The whole article is about CPI, not deflation.

Uh... "Deflation is about monetary base, not prices."

How many macroecon courses have you taken, exactly? Your statement is absurd. But Ron Paul would agree with you... (of course, he's never taken an economics class either). 67.211.130.184 (talk) 08:59, 8 January 2009 (UTC)[reply]

Well, then fix it:-) You won´t get far discrediting the whole of Bernanke. But, good luck. I also find some aspects of current economic and accounting theory and practice completely wrong. I think we are all open to open discussion. PennySeven (talk) 23:56, 31 December 2008 (UTC)[reply]

When I fix it, some robot reverts my edits. Happy New Year to you as well.

You start from a weak position not being willing to sign your contributions:-) PennySeven (talk) 23:59, 31 December 2008 (UTC)[reply]

Happy new year :-) PennySeven (talk) 00:08, 1 January 2009 (UTC)—Preceding unsigned comment added by PennySeven (talk • contribs) 00:01, 1 January 2009 (UTC)[reply]