Repo Rate Changes

[NarrowBandFtw]

We will never have deflation. Deflation is something Keynesians avoid - this is the reason even developed economies like the United States target an inflation percentage of about 2%. They do not want inflation to ever drop below 0

ftfy

Lower repo rates makes all kinds of debt more affordable which stimulates the economy. People will be more likely to buy cars and houses because the monthly costs just got lower.

More Keynesian theory, if this was actually true the US economy would be in the stratosphere after nearly a decade of virtually zero interest rates and printing cheap money like there's no tomorrow, to the point where their national debt is sitting at 20 trillion dollars.

 

[saturnz]

It is going to be disastrous, you are correct about that. We are currently in a period of decline(recession). Prices are only kept up by high input cost and loads of debt. If you don't allow price deflation, you are guaranteed long stagnant periods and big crashes were prices correct themselves.

is this an opinion informed by basic economics theory or did you just think it up?

and do you have any empirical evidence to show how deflation will prevent long stagnant periods, my evidence is Japan, study it.

http://www.japantimes.co.jp/opinion...ntary/the-truth-about-deflation/#.WXDCCDGQyUk

 

[Mike Hoxbig]

It is going to be disastrous, you are correct about that. We are currently in a period of decline(recession). Prices are only kept up by high input cost and loads of debt. If you don't allow price deflation, you are guaranteed long stagnant periods and big crashes were prices correct themselves.

Let me guess, you expect your salary to remain the same while prices fall?

 

[rietrot]

Let me guess, you expect your salary to remain the same while prices fall?

No I expect my salary to adjust according to the value I contribute to my employer. Having salaries adjustments in line with inflation/deflation is completely stupid.

 

[rietrot]

is this an opinion informed by basic economics theory or did you just think it up?

and do you have any empirical evidence to show how deflation will prevent long stagnant periods, my evidence is Japan, study it.

http://www.japantimes.co.jp/opinion...ntary/the-truth-about-deflation/#.WXDCCDGQyUk

Contrary to generally held beliefs, moreover, households’ mind-sets are not deflationary since their perceived inflation and long-term inflation expectations are always positive and far exceed the rate of change in the consumer price index even in a deflationary phase. Such upward bias has hardly changed even since the advent of QQE. Naturally, the majority of those who reportedly felt a price rise have constantly viewed such prices as unfavorable.

Customers sentiment is rather remarkable, not always rational, but always correct.
The poeple of Japan didn't experience deflation, they felt prices going up.
Not enough deflation with too much government control.

 

[saturnz]

Customers sentiment is rather remarkable, not always rational, but always correct.
The poeple of Japan didn't experience deflation, they felt prices going up.
Not enough deflation with too much government control.

uh?

so you looked for the one paragraph, ignoring the fact that there is no model to support it (regression analysis)

also when did prices go up in Japan? you telling me Japan never experienced deflation?

and where is the economic theory as well as empirical evidence to support your opinion?

 

[f2wohf]

Customers sentiment is rather remarkable, not always rational, but always correct.
The poeple of Japan didn't experience deflation, they felt prices going up.
Not enough deflation with too much government control.

You must have secret information not accessible to anybody on earth then !

“In response to chronic deflation and low growth, Japan has attempted economic stimulus and thereby run a fiscal deficit since 1991.”

https://en.wikipedia.org/wiki/Deflation
https://www.ft.com/content/b64e9262-23a0-11e6-9d4d-c11776a5124d
http://www.japantimes.co.jp/opinion...y/japan-commentary/the-truth-about-deflation/

 

[rietrot]

uh?

so you looked for the one paragraph, ignoring the fact that there is no model to support it (regression analysis)

also when did prices go up in Japan? you telling me Japan never experienced deflation?

and where is the economic theory as well as empirical evidence to support your opinion?

No, I'm telling you what the article says. The people still feel prices are to high. They didn't experience enough deflation.

This is still very basic economics 101 stuff. For empirical evedence look up the definition of demand. As in supply and demand.

 

[f2wohf]

No, I'm telling you what the article says. The people still feel prices are to high. They didn't experience enough deflation.

This is still very basic economics 101 stuff. For empirical evedence look up the definition of demand. As in supply and demand.

Except if they had 80% deflation, the prices would still be too high in Japan...

 

[rietrot]

Except if they had 80% deflation, the prices would still be too high in Japan...

That's a rather silly comment.

Proper price discovery isn't that difficult to understand. It goes up and down.

 

[buka001]

No I expect my salary to adjust according to the value I contribute to my employer. Having salaries adjustments in line with inflation/deflation is completely stupid.

OK so if SA had inflation of 200%, but your contribution to your work remained equal, you would be happy to keep your salary as is, because it is commensurate of your efforts, in spite of the fact that prices are increasing rapidly and your income remains stagnant?

 

[rietrot]

OK so if SA had inflation of 200%, but your contribution to your work remained equal, you would be happy to keep your salary as is, because it is commensurate of your efforts, in spite of the fact that prices are increasing rapidly and your income remains stagnant?

In your scenario my work would also be making more money so my contribution to that would be more. It's relative.
Getting a pay hike in line with inflation actually mean you are getting the same amount of money(the same spending power) seeing that it is a year on you should have improved somewhat. I would be unhappy with an increase matching inflation.

 

[buka001]

In your scenario my work would also be making more money so my contribution to that would be more. It's relative.
Getting a pay hike in line with inflation actually mean you are getting the same amount of money(the same spending power) seeing that it is a year on you should have improved somewhat. I would be unhappy with an increase matching inflation.

The company could even make more money if it continued to pay you the same for your contribution.

I get your point.

 

[f2wohf]

That's a rather silly comment.

Proper price discovery isn't that difficult to understand. It goes up and down.

What are you on ?

First, you say it’s not like deflation because people don’t feel the prices going down (the notion of feeling and what the people feel being completely subjective and rather hard to quantify).

Then I answer that seeing the prices in Japan, anyway people wouldn’t feel much difference except with a massive deflation.

You then say it’s a silly comment.

 

[rietrot]

What are you on ?

First, you say it’s not like deflation because people don’t feel the prices going down (the notion of feeling and what the people feel being completely subjective and rather hard to quantify).

Then I answer that seeing the prices in Japan, anyway people wouldn’t feel much difference except with a massive deflation.

You then say it’s a silly comment.

80% was silly. It was an over exaggeration.
Price discovery, supply and demand is subjective, it is all about people's feelings. If people feel something is to expensive then it probably is.

 

[f2wohf]

80% was silly. It was an over exaggeration.
Price discovery, supply and demand is subjective, it is all about people's feelings. If people feel something is to expensive then it probably is.

80% was an extreme example. But things are really overpriced in Japan if you've ever been there.

Obviously, I don't even watch the price of bread or pap while my domestic worker most likely find it overpriced and horrendously expensive.

Which is why it's not a good indicator as it is 100% subjective.

 

[saturnz]

No, I'm telling you what the article says. The people still feel prices are to high. They didn't experience enough deflation.

This is still very basic economics 101 stuff. For empirical evedence look up the definition of demand. As in supply and demand.

yeah you have no idea what you are on about

empirical evidence has nothing to do with the definition of demand

do you know what empirical evidence is?

 

[rietrot]

yeah you have no idea what you are on about

empirical evidence has nothing to do with the definition of demand

do you know what empirical evidence is?

I'll slow down a bit so that you can follow.
We're talking about inflation. Inflation is measured by CPI (customers price index(how much the price of stuff has gone up)). The price of stuff is determined by supply and demand.
I said because there's less demand(recession) we should have deflation,prices should be allowed to go down. That's what everyone wants, who complains the cost of living is too high.

Please point to any flaw in my logic. This is economics 101, I didn't venture into any fringe theory that I need to back up with empirical evidence. Its all just basic fact.

 

[supersunbird]

I'll slow down a bit so that you can follow.
We're talking about inflation. Inflation is measured by CPI (customers price index(how much the price of stuff has gone up)). The price of stuff is determined by supply and demand.
I said because there's less demand(recession) we should have deflation,prices should be allowed to go down. That's what everyone wants, who complains the cost of living is too high.

Please point to any flaw in my logic. This is economics 101, I didn't venture into any fringe theory that I need to back up with empirical evidence. Its all just basic fact.

No, input costs keep going up, so prices keep going up and people are buying less (see the retailers and car sales), but as you have seen, they have slowed down in how much their going up...

 

[saturnz]

I'll slow down a bit so that you can follow.
We're talking about inflation. Inflation is measured by CPI (customers price index(how much the price of stuff has gone up)). The price of stuff is determined by supply and demand.
I said because there's less demand(recession) we should have deflation,prices should be allowed to go down. That's what everyone wants, who complains the cost of living is too high.

Please point to any flaw in my logic. This is economics 101, I didn't venture into any fringe theory that I need to back up with empirical evidence. Its all just basic fact.

LOL, so you never heard of sticky wages?

the problem here, is that its your logic, not the prevailing logic

and there is a huge difference between aggregate demand and demand