Repo Rate Changes

[rietrot]

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...

Especially in car sales we need deflation (price cuts) and not just a slower rate of increase. That's were people throw the most money down the drain by buying something that depreciate faster than what they can repay the debt used to finance it.
I'm not saying high input cost isn't a problem, because it is.
The bubble can only inflate so much before it pops, I just prefer letting out some air slowly.

 

[Tikkop]

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...

Ah, yes. But why do input costs keep going up? Greed is built into the system. If people only would keep the prices of raw material and labour stable, then all would be well in paradise.

 

[saturnz]

Ah, yes. But why do input costs keep going up? Greed is built into the system. If people only would keep the prices of raw material and labour stable, then all would be well in paradise.

lol, as previously mentioned, people are not willing to accept lower wages

why are these thing so difficult to understand

 

[Tikkop]

lol, as previously mentioned, people are not willing to accept lower wages

why are these thing so difficult to understand

Not lower. Stable.

But I was being facetious.

Greed is a human condition.

 

[NarrowBandFtw]

people are not willing to accept lower wages

That's mostly because they erroneously equate lower wages with lower purchasing power or lower standards of living. Nobody who emigrates from here to the USA expects their USD salary to be the same number, or a higher number, than their ZAR salary. They gladly accept the "lower" number knowing full well it doesn't mean reduced purchasing power because the USD is significantly stronger than the ZAR.

In the same fashion deflation would make your purchasing power increase and put you in the position where the actual number of your salary could drop without adversely affecting your standard of living. As long as your purchasing power increases it shouldn't matter what your salary is doing ... alas ... people are idiots and are more easily brainwashed into believing higher salaries are always good even if it is outpaced by inflation which reduces their purchasing power.

 

[saturnz]

Not lower. Stable.

But I was being facetious.

Greed is a human condition.

yeah I can also be facetious and ask which wages, real or nominal

 

[saturnz]

In the same fashion deflation would make your purchasing power increase and put you in the position where the actual number of your salary could drop without adversely affecting your standard of living. As long as your purchasing power increases it shouldn't matter what your salary is doing ... alas ... people are idiots and are more easily brainwashed into believing higher salaries are always good even if it is outpaced by inflation which reduces their purchasing power.

let me ask a simple question

if you know the price of an item is going to fall in the future, are you going to buy it today, or in the future?

 

[NarrowBandFtw]

if you know the price of an item is going to fall in the future, are you going to buy it today, or in the future?

Lol, more Keynesian bullshyte, do I want the item now or in future? Do I need the item now or in future? Knowing the petrol price is dropping on the first Wednesday of the month makes zero difference in my behaviour when my tank runs empty two weeks prior.

If there's no bread in the house today I buy a new bread, it doesn't matter if there's a Checkers flyer in the mailbox promising 10% or even 90% discount in a few days time. Luxuries? Maybe I hold off on buying that new car if I know of a 50% price drop in the next year ... in the next 5 years though? Who the hell waits 5 years in our instant gratification society?

In short: the Keynesian view that savings equal money hording which is unproductive and hurts the economy is just bullshyte, nothing more, nothing less.

 

[saturnz]

Lol, more Keynesian bullshyte, do I want the item now or in future? Do I need the item now or in future? Knowing the petrol price is dropping on the first Wednesday of the month makes zero difference in my behaviour when my tank runs empty two weeks prior.

If there's no bread in the house today I buy a new bread, it doesn't matter if there's a Checkers flyer in the mailbox promising 10% or even 90% discount in a few days time. Luxuries? Maybe I hold off on buying that new car if I know of a 50% price drop in the next year ... in the next 5 years though? Who the hell waits 5 years in our instant gratification society?

In short: the Keynesian view that savings equal money hording which is unproductive and hurts the economy is just bullshyte, nothing more, nothing less.

Keynesian?

Its simple logic, in an environment of deflation, logic dictates prices will fall t+1

so do you buy the item at point t or t+1

this does not just apply to consumption, but investment, government expenditure etc

not everything you demand has to be demanded and consumed today

 

[Tikkop]

yeah I can also be facetious and ask which wages, real or nominal

If there were no inflation, your question is irrelevant.

 

[NarrowBandFtw]

Keynesian?

Its simple logic, in an environment of deflation, logic dictates prices will fall t+1

so do you buy the item at point t or t+1

It is simplistic logic, not simple logic, there's a vast difference. And yes, it is straight out of the Keynesian BS bible that inflation = good and deflation = bad. It is precisely how they try and justify that ridiculous point of view.

Using much more sensible logic, you buy the item when you need it, the price does not affect when you will need it.

 

[saturnz]

It is simplistic logic, not simple logic, there's a vast difference. And yes, it is straight out of the Keynesian BS bible that inflation = good and deflation = bad. It is precisely how they try and justify that ridiculous point of view.

Using much more, sensible logic, you buy the item when you need it, the price does not affect when you will need it.

you use bread as an example and call my logic simplistic LOL

 

[NarrowBandFtw]

you use bread as an example and call my logic simplistic LOL

Bread is an item that is needed and repurchased regularly, note how I also used the petrol price which has a massive impact on the economy in general and then luxuries as whole which might be the only category that honours the simplistic logic.

A correction though, I never called your logic simplistic, I called Keynesian logic simplistic. This argument is a Keynesian one, it is certainly not your original thought. You are essentially just regurgitating the simplistic logic of Keynes.

 

[saturnz]

how much does bread consumption contribute to aggregate demand ?

and you also ignore investment and government expenditure decisions which can easily be delayed and both of which constitute a large percentage of aggregate demand

 

[rietrot]

Ah, yes. But why do input costs keep going up? Greed is built into the system. If people only would keep the prices of raw material and labour stable, then all would be well in paradise.

There is bad greed that will cause a business to fail(like we're seeing in the car industry, and strikers wanting more than they are worth) and then their is good greed, just normal profit motivate.
The later should be encouraged, making money is why everything works. Part of the general problem we have is people thinking the system is somehow unfair just because they are to lazy to complete. It is impossible to force prices to be stable(its been tried in countries like Venezuela, most recent example) price control doesn't work. Prices just like people need freedom to move wherever they want.

 

[Nod]

how much does bread consumption contribute to aggregate demand ?

and you also ignore investment and government expenditure decisions which can easily be delayed and both of which constitute a large percentage of aggregate demand

http://www.sacb.co.za/webroot/main/history_of_bread.html

The total production of bread based on flour sales in 2003 was 2 800 million loaves (1 500 million white loaves and 1 300 million brown loaves). This is approximately 62 loaves for every South African during the year or nearly 3 slices of bread per day for each person. The market value was approximately R12 billion.

 

[NarrowBandFtw]

how much does bread consumption contribute to aggregate demand ?

What does it matter? It is but one, of MANY, examples where the price in no way affects buyers' behaviour.

and you also ignore investment and government expenditure decisions which can easily be delayed and both of which constitute a large percentage of aggregate demand

I haven't ignored it, it just isn't unique, a properly run government has to meet demands from the electorate. The electorate does not accept "it will be cheaper to do next year" as an excuse. The Western Cape needs water infrastructure solutions NOW, nobody cares about the cost. When Eskom had load shedding every day an immediate solution was needed, the price of supply doesn't enter into the equation at all, the need overrides it.

Then something even further off topic: government spending has no business representing a big portion of aggregate demand, that's a symptom of an inefficient government.

 

[saturnz]

What does it matter? It is but one, of MANY, examples where the price in no way affects buyers' behaviour.


I haven't ignored it, it just isn't unique, a properly run government has to meet demands from the electorate. The electorate does not accept "it will be cheaper to do next year" as an excuse. The Western Cape needs water infrastructure solutions NOW, nobody cares about the cost. When Eskom had load shedding every day an immediate solution was needed, the price of supply doesn't enter into the equation at all, the need overrides it.

Then something even further off topic: government spending has no business representing a big portion of aggregate demand, that's a symptom of an inefficient government.

LOL, stick with the bread argument

 

[NarrowBandFtw]

LOL, stick with the bread argument

Now that you've been reduced to "LOL" and failed jabs I'm utterly convinced in your argument ...

Not your fault though, it's a natural reaction when the wool is pulled from your eyes, takes time to adjust to the shock of reality.

 

[saturnz]

Now that you've been reduced to "LOL" and failed jabs I'm utterly convinced in your argument ...

Not your fault though, it's a natural reaction when the wool is pulled from your eyes, takes time to adjust to the shock of reality.

yeah as if I can't find this funny

What does it matter? It is but one, of MANY, examples where the price in no way affects buyers' behaviour.

you will never be convinced by my argument if you believe this, so I will just laugh at your statements