Flation

[alan2here]

As I understand although I may well be wrong.

 

About +2% flation is good.

 

Inflation (>0%)

Things you buy become more expensive over time.

Your income becomes greater over time.

The rich they don't stay rich for long unless they earn money.

 

Deflation (<0%)

Things you buy become cheaper over time.

Your income also decreases over time.

For money you emediatly spend this is the same as when in inflation but any money you save buys you more stuff.

People irrationally become anoyed that they are getting payed less over time and jobs are lost when this is maneged badly.

 

Problem

The problem with deflation is that if other countries are inflating while you are deflating then things you need from abroad become intolerably expensive.

 

Solution

All countries deflate together?

Edited February 11, 2009 by alan2here

[CaptainPanic]

First of all: I really do not think that economics belong on a Science forum... Even professors in economics do not understand the economics, and main theories (for example Keynes) have recently been proven wrong (admitted by no less than Keynes himself).

 

Having said that... the currency exchange market does play a big role here. It's not like Zimbabwe has become millions of times cheaper for us. They've had an inflation rate of 11,200,000%, or even more. I just googled for a random article from last year.

 

I believe the only reason that governments and economies want to have low inflation or deflation is stability.

 

What worries me the most is that the coupling between production of goods and money has been lost. If we were economists, then we could talk about exchange rates and all kinds of flations forever, without ever realizing that every euro or dollar should stand for a product that has been produced somewhere.

 

Money was invented as a way to trade. It was replacing goods.

First people traded goods.

Then they started using money for goods.

Then people started trading money for money.

[npts2020]

Scientific or not I think there ought to be somewhere to discuss economic principles at this site. IMO much of economics is as aimed at obfuscation as much as explaining anything and it would be a worthwhile exercise for those here that are interested to parse out. Just my 2 cents. To the OP; how could such a thing be made to happen?

[CaptainPanic]

Apologies, I know that my post probably offends economists...

I should not offend people.

 

Perhaps we could create an "Economics" subforum in the "Pseudoscience and Speculations" forum?

After all, speculation is what's happening on the stock market... and contrary to "real" science, economists usually warn that results from the past will not give any guarantees for the future. They also base their prognoses on feelings. Which definitely would put it in that Pseudoscience and Speculations forum.

 

More apologies: I'm hijacking this thread now with this 2nd post completely off topic.