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Paul
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Deflation

March 22nd, 2020, 5:00 pm

For Randor to discuss #MMT.
 
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Randor
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Re: Deflation

March 23rd, 2020, 3:13 pm

hahaha!
not sure if you are serious though really
 
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Paul
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Re: Deflation

March 23rd, 2020, 5:07 pm

well, not necessarily about MMT but serious about deflation.

Especially with respect to current situation. E.g, no more holidays = lower rent for holiday apartments!
 
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Randor
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Re: Deflation

March 23rd, 2020, 10:08 pm

It's strange that people still take seriously the economists in their ivory towers that never imagined in their wildest nightmares that the GFC 2008-2019 financial crisis could happen, ie that people still give those particular economists the time of day is just amazing! There is a whole array of different schools of thought , yet academia is still dominated by those mad monetarists, leaving the Keynesians (and Post Keynesians - of which MMT = chartalism + functional finance + more , is one of them) aside.
In short, I hope that in your analysis of deflation or any other topic of economics you will read all the schools of thought to an equal extent rather than start off already decided in the school you will "subscribe" to !

One of the key things that MMT explains (debunks really) is that the quantity theory of money explanation for inflation is complete nonsense. (Thus explaining why the massive QE programs over the last decade led to ZERO inflation, rather than what that QTOM would say!)
 
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Randor
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Re: Deflation

March 23rd, 2020, 10:27 pm

The scenario we have here as I see it , and I am no expert at all, is really like a scenario of a war, where there is a massive jolt to the real economy. We have a force majeure catastrophe event, which will cause huge unemployment, but only for say a number of months until the virus has run its course.
We will see both supply shortages and demand shortages and Depending on the government policies, we'll see if inflation or deflation results.
I don't see any possibility at all of hyperinflation in any modern diversified economies, assuming that these countries realise the seriousness of the situation and engage in the right policies!. The MMT LITERATURE explains at length the causes of hyperinflation with many examples eg Weimar, Zimbabwe, Venezuela etc, I am not an MMT expert though so I may be wrong!
If governments do not bail out the ordinary people, then we could end up with masses of unemployed bankrupts and massive demand shortages causing deflation.
If governments do not bail out the corporates who are now running out of cash and being downgraded, we could face supply shortages and inflation, but my gut feel is that we have plenty of excess capacity mostly that can be brought in line to fill in supply shortages.
Last edited by Randor on March 23rd, 2020, 10:42 pm, edited 1 time in total.
 
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Paul
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Re: Deflation

March 23rd, 2020, 10:30 pm

No one listens to economists much these days. The "Economist" magazine itself gets everything wrong. I have complained about econ models for a quarter of a century or thereabouts.

And only central bankers believe theories about money supply and printing money.

Human behaviour + laws are what dominate. 
 
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Randor
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Re: Deflation

March 23rd, 2020, 10:47 pm

On the contrary, both the left and the right stick firmly to the monetarists school dogmas.
At all times mortified about the balancing of the sacred budget as if the nation were on the verge of being sold into debt bondage!
MMT explains to us the incredible fact that without budget deficits we actually would not have Any money at all! The public sector deficit = private sector surplus.

MMT is a huge eye opener, Paul I really hope you will read it and become fully appraised of its many insights
 
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Paul
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Re: Deflation

March 24th, 2020, 4:47 pm

Is it possible to have some prices rise and others fall, dramatically? We are seeing people getting back to basics. There's less demand for many things but equally possibly less supply for some of those basics. 
 
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Randor
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Re: Deflation

March 25th, 2020, 12:11 pm

Yes thats true
Eg oil falling,
But other stuff that's imported for example may go up in price because of supply chain slow down, FX rate fall,
 
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Paul
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Re: Deflation

March 26th, 2020, 7:24 am

Orange juice up. Mail-order shirts down.
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