tag:blogger.com,1999:blog-2761684730989137546.post4300514042721822356..comments2024-03-29T02:19:19.866-04:00Comments on Mike Norman Economics: Lance Roberts — Guest Post: The Fed's Real Worry - A Pick Up In Deflationmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-2761684730989137546.post-18549382075541401862013-05-26T20:47:51.039-04:002013-05-26T20:47:51.039-04:00Yes Paul, this dynamic is not talked about much. A...Yes Paul, this dynamic is not talked about much. A successful business will raise prices, lay off employees, use up its stockpile of raw materials at a reduced rate, and it will survive. It will not buy new raw materials until it really needs to.<br /><br />In the mean time, the economy will slowly spin down. When the time comes to repurchase raw materials, and if many other businesses are doing the same, the economy will stabilize at a much lower level of economic activity, and at much higher real prices (measured in multiples of nominal median income)<br /><br />This is almost exactly what is happening today.Clonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-55385895298576227642013-05-26T20:40:48.421-04:002013-05-26T20:40:48.421-04:00This comment has been removed by the author.Unknownhttps://www.blogger.com/profile/07198667003900590106noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-18269506258078604662013-05-26T19:03:14.296-04:002013-05-26T19:03:14.296-04:00Clonal...good description of what the real dynamic...Clonal...good description of what the real dynamic looks like.paul melihttps://www.blogger.com/profile/04604543110795683837noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-7045244538244099792013-05-26T13:09:43.841-04:002013-05-26T13:09:43.841-04:00Also, people think that deflation means a drop in ...Also, people think that deflation means a drop in prices. Deflation really is a reduction in the amount of money circulating. A reaction to this on the part of businesses can actually be to increase their prices, as they try to recoup their costs. They cannot reduce their prices, as that would cause them to take increasing losses, which will cause them to go bankrupt. Most of the deflation in prices comes from business filing for bankruptcy.<br /><br />You end up with higher prices at much lower levels of economic activity.<br /><br />This is one of the reasons that deflationary spirals are so deadly.Clonalhttps://www.blogger.com/profile/18290009954839887975noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-82673809158583669952013-05-26T06:00:12.592-04:002013-05-26T06:00:12.592-04:00ZH is full of teenagers, goldbugs, and people who ...ZH is full of teenagers, goldbugs, and people who refuse to grow up (synonyms). What did you expect?Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-27466980574566084922013-05-26T05:15:39.864-04:002013-05-26T05:15:39.864-04:00Not a single respnse in the comments dealing with ...Not a single respnse in the comments dealing with the content of the post, lots of sloagans and shibboleths. These people are brain-dead.Anonymoushttps://www.blogger.com/profile/11018306000410021518noreply@blogger.com