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Visual Inflation/Deflation For Dummies

Submitted by Tyler Durden on 09/08/2010 12:37 -0400

Hyperinflation

While certainly not news to most people, the following visual guides from Mint on the two most critical monetary concepts should provide a vivid explanation to all those who are still confused as to why deflation is good for savers and for the middle class in general, and bad for the Fed, for banks, and for all those who are levered to their gills in toxic, non current debt. As for all those who still think that hyperinflation is a function of rising prices, there are other, more appropriate blogs for you.

Inflation:

Deflation:

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Thu, 09/09/2010 - 07:47 | 571366 blindman

i did. but there is more and i tried to cover some of the

other stuff. ?

Wed, 09/08/2010 - 19:36 | 570705 Acting Man

Once again with the myth of a deflationary spiral. Just once I would like to see a Keynesian piece grapple with the following facts:

1. The natural tendancy of prices is to fall because businesses are constantly innovating and improving processes. This allows them to lower prices while mainting profit margin (if not increase it).

2. When people's purchasing power increases and they have that security it will keep going up, they will actually buy more or invest more. Either way, money is still spent on goods and services. The fact that money's worth is increasing doesn't mean it will be held for eternity. Spiral ended.

Wed, 09/08/2010 - 23:58 | 571028 Seer

"The natural tendancy of prices is to"

But... is this not an assumption, that we're in some sort of "natural" state/condition? I think so. Here's two things that put a monkey wrench into this thinking:

1) Scarcity of raw/input materials;

2) Reversal of economies of scale.

It's primarily economies of scale that's responsible for cheaper products. As factory utilization (due to reduced demand [less people employed; increased prices from increased costs of input materials]) drops so will ecnomies of scale, and as this reversal happens it's non-linear, just like it was going up; this, then, is your continuing spiral.

Thu, 09/09/2010 - 00:00 | 571030 Seer

I'd also like to point out how well used this term was as we scaled up, yet I don't believe I hear anyone talking about it on the downside... Hm, talk about a failure to operate on anything other than a positive feed back loop.

Wed, 09/08/2010 - 19:48 | 570723 Glaucus

"Sweet spot"? How about "shit hole"? Inflation is everywhere and always a "stealth tax" that is accordingly a pox on society. As the computer industry so relentlessly demonstrates, productivity gains lead to lower prices and thus to increased purchasing power. I mean, when's the last time you paid more money for less computing power? How about never, a sound-money economy doing so as a matter of course, to the ever-increasing benefit of society:

http://mises.org/pdf/asc/Reisman6.PDF

Jesus H. Christ, I'm at the verge of giving up on Zero Hedge for publishing this pernicious nonsense. I mean, did Benny and the Inkjets write this?

Wed, 09/08/2010 - 19:59 | 570742 akak

Agreed, the initial post was little more than pure Keynesian bunk. I have to wonder why it was even posted here, so much does it smack of muddle-headed "mainstream" so-called "thinking" on inflation and deflation.

Thu, 09/09/2010 - 00:44 | 571091 RockyRacoon

Think of it as Johnny Bravo on steroids. Spouting the same old crap.

You gotta admit, this graphic will be really popular with the MSM. It's good for us 'cause it puts the common people off the track so we can corner the physical gold market.

Tue, 09/28/2010 - 03:52 | 609377 Herry12

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Fri, 07/15/2011 - 06:05 | 1458668 hama

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Fri, 07/15/2011 - 07:58 | 1458822 hama

I heard the whole interview, and he said "if silver goes to triple digits this year that would make me think about selling. On the other hand, if the dollar is confetti while silver is $150, I'll keep my silver."
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Fri, 07/15/2011 - 12:31 | 1459904 hama

Thanks post was little more than pure Keynesian bunk. I have to wonder why it was even posted here, so much does it smack of muddle-headed

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Sat, 07/16/2011 - 19:02 | 1462764 hama

It was the fault of the Japanese for allowing such a reactor to be built in that location without additional safety measures being required. That's the real story here. That and the shitty enforcement of already lax safety standards.
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Tue, 07/26/2011 - 11:11 | 1494464 pama

All of these articles debating in/deflation are either disingenuous or misguided at best.
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Visual Inflation/Deflation For Dummies

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