The Economic Crisis
-
- Admin Emeritus
- Posts: 962
- Joined: January 12th, 2007, 7:36 pm
- Division: Grad
- Has thanked: 0
- Been thanked: 17 times
- 2win
- Member
- Posts: 553
- Joined: March 3rd, 2009, 6:07 pm
- Division: C
- State: TX
- Has thanked: 0
- Been thanked: 0
- Contact:
Re: The Economic Crisis
Oh, well...anybody got anything to dicuss? How about how some other countries are facing inflation including the US?
k-tx. retiring from scioly.
-
- Admin Emeritus
- Posts: 962
- Joined: January 12th, 2007, 7:36 pm
- Division: Grad
- Has thanked: 0
- Been thanked: 17 times
Re: The Economic Crisis
Good. Seeing a positive number in the inflation column right now is a good thing. Because we very realistically could be facing deflation, which is bad. Very bad.
Being in a recession, we're not going to see any excess of inflation. According to aggregate supply and demand, when the equilibrium is below the Potential GDP (potential output), we are not going to see much inflation.
So the fact that we're still seeing some inflation is a good thing. Although the inflation rate is getting smaller, which is worrisome.
Being in a recession, we're not going to see any excess of inflation. According to aggregate supply and demand, when the equilibrium is below the Potential GDP (potential output), we are not going to see much inflation.
So the fact that we're still seeing some inflation is a good thing. Although the inflation rate is getting smaller, which is worrisome.
- 2win
- Member
- Posts: 553
- Joined: March 3rd, 2009, 6:07 pm
- Division: C
- State: TX
- Has thanked: 0
- Been thanked: 0
- Contact:
Re: The Economic Crisis
Sorry, but why would not seeing the inflation rate go up a bit be worrisome?
k-tx. retiring from scioly.
- Phenylethylamine
- Exalted Member
- Posts: 1075
- Joined: January 8th, 2009, 4:47 pm
- Division: Grad
- State: MA
- Has thanked: 0
- Been thanked: 0
Re: The Economic Crisis
Deflation? Where would that come from in a recession? The Great Depression- clearly the biggest "recession" this country has seen- was full of stories of families having to take entire wheelbarrows of cash to buy a loaf of bread... that doesn't sound like deflation to me.
Protein Modeling Event Supervisor 2015
MA State Science Olympiad Tournament
MIT Invitational Tournament
--
Ward Melville High School Science Olympiad 2010-2012
Paul J Gelinas JHS Science Olympiad 2007-2009
MA State Science Olympiad Tournament
MIT Invitational Tournament
--
Ward Melville High School Science Olympiad 2010-2012
Paul J Gelinas JHS Science Olympiad 2007-2009
-
- Admin Emeritus
- Posts: 962
- Joined: January 12th, 2007, 7:36 pm
- Division: Grad
- Has thanked: 0
- Been thanked: 17 times
Re: The Economic Crisis
Because that would mean it's going down. You absolutely want to avoid deflation at any cost. Deflation is bad.2win wrote:Sorry, but why would not seeing the inflation rate go up a bit be worrisome?
If you look at a graph of aggregate supply and demand curves, that means we have a reduction in demand. So naturally production will be reduced as well to re-establish an equilibrium. That would mean we're operating even further below our potential GDP. Thus, we'd have more unemployment, be even in a deeper recession.
I'll try to draw an aggregate supply/demand graph or scan in my economics notes if it would help.
Uhm, wrong. The Great Depression was the worst case of deflation our economy has ever seen. It was a huge deflationary spiral.Phenylethylamine wrote:Deflation? Where would that come from in a recession? The Great Depression- clearly the biggest "recession" this country has seen- was full of stories of families having to take entire wheelbarrows of cash to buy a loaf of bread... that doesn't sound like deflation to me.
- Phenylethylamine
- Exalted Member
- Posts: 1075
- Joined: January 8th, 2009, 4:47 pm
- Division: Grad
- State: MA
- Has thanked: 0
- Been thanked: 0
Re: The Economic Crisis
Then where do said stories of inflation come from? I mean, my US History teacher last year wasn't the world's greatest, but I'm pretty sure the textbook backed her up on that one.
Protein Modeling Event Supervisor 2015
MA State Science Olympiad Tournament
MIT Invitational Tournament
--
Ward Melville High School Science Olympiad 2010-2012
Paul J Gelinas JHS Science Olympiad 2007-2009
MA State Science Olympiad Tournament
MIT Invitational Tournament
--
Ward Melville High School Science Olympiad 2010-2012
Paul J Gelinas JHS Science Olympiad 2007-2009
- Avis_de-Incendia
- Member
- Posts: 122
- Joined: March 5th, 2009, 12:56 pm
- Division: B
- Has thanked: 0
- Been thanked: 0
Re: The Economic Crisis
In economics, deflation is a persistent decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below zero percent, resulting in an increase in the real value of money — a negative inflation rate. Inflation reduces real value in money, deflation increases the real value in money. This should not be confused with disinflation, a slow down in the inflation rate (when inflation decreases, but remains positive).
Deflation is considered a problem in a modern economy because of the potential of a deflationary spiral and its association with the Great Depression, although not all episodes of deflation correspond to periods of poor economic growth historically.
Deflation is considered a problem in a modern economy because of the potential of a deflationary spiral and its association with the Great Depression, although not all episodes of deflation correspond to periods of poor economic growth historically.
Hello! :]
-
- Admin Emeritus
- Posts: 11
- Joined: November 19th, 2005, 4:21 pm
- Division: Grad
- Has thanked: 0
- Been thanked: 0
Re: The Economic Crisis
FOMC Statement: http://www.federalreserve.gov/newsevent ... 90318a.htm
"Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months."
The FOMC statement is in contrast to the Bernanke interview conducted by 60 minutes. In my opinion, the 60 minutes interview was rosier than the FOMC statement.
"Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months."
The FOMC statement is in contrast to the Bernanke interview conducted by 60 minutes. In my opinion, the 60 minutes interview was rosier than the FOMC statement.
-
- Admin Emeritus
- Posts: 962
- Joined: January 12th, 2007, 7:36 pm
- Division: Grad
- Has thanked: 0
- Been thanked: 17 times
Re: The Economic Crisis
I think you copied that off Wikipedia...AsllaPiscu wrote:In economics, deflation is a persistent decrease in the general price level of goods and services. Deflation occurs when the inflation rate falls below zero percent, resulting in an increase in the real value of money — a negative inflation rate. Inflation reduces real value in money, deflation increases the real value in money. This should not be confused with disinflation, a slow down in the inflation rate (when inflation decreases, but remains positive).
Deflation is considered a problem in a modern economy because of the potential of a deflationary spiral and its association with the Great Depression, although not all episodes of deflation correspond to periods of poor economic growth historically.
But yes, that's exactly correct.
Phenylethaylamine, I don't know where your stories are coming from. And your teacher was wrong then. It's not an arguable topic - there was deflation, not inflation, during the Great Depression. Look it up for yourself.
And I recommend reading the link that bah posted too. You'll see that the Federal Reserve is actually trying to increase inflation. The national rate for inflation is 3-4%. That means we ideally will have 3% to 4% inflation every year. Too much inflation is a problem, as prices rise but output does not. But too little inflation, or deflation, is a problem as well. That means lowering production and higher unemployment. The Federal Reserve tries to act to keep it in its correct place.
Who is online
Users browsing this forum: No registered users and 2 guests