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Deflation

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  1. GODSHAMGOD GODSHAMGOD is offline

    Philadelphia, PA
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    Nov 20th, 2008 (11/20/2008 12:42pm)

    What impact does deflation have on Government Debt?
  2. phish42O phish42O is offline

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    Nov 20th, 2008 (11/20/2008 1:55pm) in reply to GODSHAMGOD

    maybe...
  3. BirdWings BirdWings is offline

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    Nov 20th, 2008 (11/20/2008 1:59pm) in reply to GODSHAMGOD

    perhaps
  4. moscow01 moscow01 is offline

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    Nov 20th, 2008 (11/20/2008 1:59pm) in reply to phish42O

    I thaught the topic was about 'defloration'. Sigh...............
  5. resilient resilient is offline

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    Nov 20th, 2008 (11/20/2008 2:01pm) in reply to GODSHAMGOD

    obv drives yields lower and prices higher, first because real yields will rise unless nominal yields fall to counteract it, and second because deflation will almost certainly accompany a declining economy, which will result in easier monetary policy by the central bank. A factor that could work in reverse of this (for a specific country) is if the country's debt was deemed to be a credit risk which would drive the spread to safer countries' debt higher.
     
  6. GODSHAMGOD GODSHAMGOD is offline

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    Nov 20th, 2008 (11/20/2008 2:24pm) in reply to resilient

    What I was more interested in was how it will affect our current debt levels(in real terms). Doesn't deflation make our REAL national debt much larger?
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  7. resilient resilient is offline

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    Nov 20th, 2008 (11/20/2008 5:09pm) in reply to GODSHAMGOD

     
    Originally Posted by GODSHAMGOD View Post

    What I was more interested in was how it will affect our current debt levels(in real terms). Doesn't deflation make our REAL national debt much larger?

    true
     
  8. dolphin13 dolphin13 is online now OT Vice MVP

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    Nov 20th, 2008 (11/20/2008 5:18pm) in reply to resilient

    how about this. who cares if we bailout all these companies and give them money? One of the big worries about doing these bailouts was runaway inflation. But that doesn't seem likely so why not bail everyone out?

    (just playing devil's advocate here)
  9. tekiller tekiller is offline

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    Nov 20th, 2008 (11/20/2008 5:23pm) in reply to dolphin13

    we are not seeing inflation "yet" that will come down the road
  10. oBOBCATu oBOBCATu is offline

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    Nov 20th, 2008 (11/20/2008 6:20pm) in reply to GODSHAMGOD

     
    Originally Posted by GODSHAMGOD View Post

    What impact does deflation have on Government Debt?

    It raises the value of Government Debt in real terms. Government will not be happy so it will employ many inflation friendly economists in their federal reserve banks.
  11. norcaljeff norcaljeff is offline 2010 OT Thread Kill Leader

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    Nov 20th, 2008 (11/20/2008 6:21pm) in reply to GODSHAMGOD

    Obama will fix it. no worries
  12. GODSHAMGOD GODSHAMGOD is offline

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    Nov 20th, 2008 (11/20/2008 6:55pm) in reply to dolphin13

    I knew the answer. Just trying to stimulate a little discussion on why this is so troubling.

    And to answer your question, that is what I think we will do. Keyensian stuff, but the wealth is gone. We'll increase gov't spending to keep people employed but devalue the currency in doing so. So either way it's bad.
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