Deflation: whats the problem?

It still isn't the govt's job to provide people with jobs...all they can do is set favourable conditions.
If these people are working for less, so what, at least they aren't claiming benefits.

I don't agree. Some will be earning below the minimum. The reason that they are working for low pay, if necessary, is because they, probably, are supported by their parents, or they have a mortgage to pay. We, also, like you, have a lot of illegal immigrants here. They are willing to earn a lot less than local labour because of the conditions they lived in in the own country.

But, in any case, this is going a bit off topic, Deflation brings all of these problems.
 
Actually this isn't a bad news story at all. Read the story, ex-energy prices underlying inflation stood at 0.6%, same as November. For an energy importing region like Europe, lower oil is an excellent thing and people will feel the increased spending power whether it's through lower prices at the petrol pump, lower utility bills, or for industrial companies, higher margins. Yes, mathematically it's caused 'deflation', but it doesn't matter when it's down to an input cost price shock (in the same way that economists look through higher inflation caused by weather-related food price increases). It's if/when that underlying 0.6% number goes negative that we're all in trouble...
 
It still isn't the govt's job to provide people with jobs...all they can do is set favourable conditions.
If these people are working for less, so what, at least they aren't claiming benefits.

Hi cv,

Another point while I ,m at it! :)

I say that it is the government's job to make sure that its people have good services.

Cameron's government has been cutting the budgets of police, NHS, fire brigades, military, education---the lot, ever since it has been in power.
All those people are out of work. Rajoy is the same, here. The government must bear some of the responsibilty for causing unemployment with all these cuts.
 
but deflation is triggered by companies lowering their prices.
its not that deflation comes first, then all this jobs/loans stuff happens as a consequence.
the price came down, by design of the companies, then it was seen as deflation.

example:
The price of cornflakes came down. This meant the cost of living went down.
This was seen as deflation.
Its ALREADY happened. (the price of cornflakes coming down)

Companies will continue to sell their cornflakes at a slightly lower price.
How does this mean jobs will be lost, or loans become expensive?

No, that is not the same thing, You are talking about competition, volume and market share. Deflation happens, not because of competition, but because a product cannot be sold and workers are laid offand cannot find other work. These workers lose buying power and the government loses tax revenue. Its a vicious circle.
 
But many low paid workers in the UK do claim benefit to top up their wages !
Favourable conditions like no Zero hour contracts, a living wage, reasonable rents, house prices/rents within grasp of ordinary working low wage earner? Not with Cameron and the other rich kids.

http://www.theguardian.com/books/20...shment-how-get-away-with-it-review-owen-jones

The working man:



By saying favourable conditions, I didn't mean tax credit top ups...back in the day, if you wanted more money, you did more work. The introduction by the last govt of something for nothing, which is what tax credits are, is yet another distortion of economic truth. How can anyone know their true worth when all we get is nonsense quoted like, "everyone is entitled to a living wage".

I respectfully submit that no one is entitled to anything that didn't produce a greater value. If the people want more, they should do more, simple as.

While wer'e about it, I actually object to govt spending my money. What makes them think they can spend it in a better way than I can.

:)
 
Hi cv,

Another point while I ,m at it! :)

I say that it is the government's job to make sure that its people have good services.

Cameron's government has been cutting the budgets of police, NHS, fire brigades, military, education---the lot, ever since it has been in power.
All those people are out of work. Rajoy is the same, here. The government must bear some of the responsibilty for causing unemployment with all these cuts.

Split, you are mixing up real economy jobs with govt payroll jobs again. To think that they are one and the same thing is a big mistake.

Govt payroll jobs can only ever be funded from those in private sector employment via their taxes. Anything over and above fully costed and funded govt jobs has to come from borrowing and debt. It's the borrowing and ever increasing debt that's the problem...just kicking the can down the road and never a day of reckoning. Well that day of reckoning is upon us all...and responsible govt's are trimming the public sector back to sustainable levels. What is the problem with this ? I can't see any.
 
Split, you are mixing up real economy jobs with govt payroll jobs again. To think that they are one and the same thing is a big mistake.

Govt payroll jobs can only ever be funded from those in private sector employment via their taxes. Anything over and above fully costed and funded govt jobs has to come from borrowing and debt. It's the borrowing and ever increasing debt that's the problem...just kicking the can down the road and never a day of reckoning. Well that day of reckoning is upon us all...and responsible govt's are trimming the public sector back to sustainable levels. What is the problem with this ? I can't see any.

Agree with sentiment but so much of the economy is based on debt I can't see why the same can not or should not apply to government.

If everybody including institutions had to save up money before being able to invest - assuming no credit was given, the finance industry would cease to exist along with industrial production which it finances.

If you take this argument to it's n'th conclusion we shouldn't really borrow any money?

Also, countries that don't have strong government usually end up going down the road to anarchy?

These arguments - sometimes a little like economic theory, sound all well and good on paper but not so good in reality.
 
An insight on working conditions for some people:

http://www.tuc.org.uk/workplace-iss...ng-modern-day-working-conditions-new-magazine

Low Pay:

http://www.theguardian.com/business/2014/oct/18/economy-bleak-british-workers-technology

I lost a lot of text somewhere- so I'll paraphrase: If Cameron's rich friends pay low wages such that the average unqualified worker on Zero hour contracts, part time hours or simply low wages such that payment of bills, high private rents,travel costs etc.are difficult -no problem, because we, the taxpayer will stump up tax credits to top up low wages to a living wage level.This suits Cameron's rich buddies who in turn pay into the Tory coffers and get richer. It's a scratch my back and I scratch yours mentality except you and I are excluded because we carry no influence apart from a vote (so smoke and mirrors are useful here to blame the low paid for their plight, accuse some of scrounging but overlook the benefits paid to their cronies in greater company profit).So yes, we the people subsidize the low paid for the benefit of the fat cats.WE bailed out the banks remember.
 
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Actually this isn't a bad news story at all. Read the story, ex-energy prices underlying inflation stood at 0.6%, same as November. For an energy importing region like Europe, lower oil is an excellent thing and people will feel the increased spending power whether it's through lower prices at the petrol pump, lower utility bills, or for industrial companies, higher margins. Yes, mathematically it's caused 'deflation', but it doesn't matter when it's down to an input cost price shock (in the same way that economists look through higher inflation caused by weather-related food price increases). It's if/when that underlying 0.6% number goes negative that we're all in trouble...

Yes agree absolutely. This is good for consumers and producers as oil is a big energy cost of input.

What we see is in effect, distribution of the cake from oil producing to oil consuming countries than in previous time period.

How this plays out on the international stage from reduced demand for imports from Russia and ME countries against increased demand for goods n services in oil consuming countries subject to variations in interest, inflation and exchange rate moves remains to be seen.

From the man on the UK street perspective (less North Sea Oil) it's definitely positive.

However, in the medium to longer term, I'm not sure why oil producing countries will continue to pump oil out at say cost of $70 only to sell it for $50. Winding down of oil industries and downward pressure on prices will hit the level of economic activity - with some time lags imo.

Without opening a can of worms, on balance - a small degree of inflation is deemed to be more desirable than those near 0% rates. :whistling
 
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I take it you will be voting UKIP :LOL:

Apparently they have a whole raft of policies to do with vetting immigrants so the unskilled will not be welcome as before. This will in turn push up the wages for all as companies will have to pay more to get the people they want.
 
I take it you will be voting UKIP :LOL:

Apparently they have a whole raft of policies to do with vetting immigrants so the unskilled will not be welcome as before. This will in turn push up the wages for all as companies will have to pay more to get the people they want.

Really now???

How they considered how this will effect wages for skilled workers too :?: :!: :idea:

Bright sparks that they are... :whistling

Thinking about it - I reckon Arthur Scargil likely to be voting for them too then ;)
 
Really now???

How they considered how this will effect wages for skilled workers too :?: :!: :idea:

Bright sparks that they are... :whistling

Thinking about it - I reckon Arthur Scargil likely to be voting for them too then ;)

Well, think boats on a rising tide...all wages will be lifted as competition for skills increases. It's the mass of unskilled workers that are effectively dragging down everyone and the employers know this...basically the employers are treating normally very skilled work in the same way as unskilled work. Their attitude is, take it or leave it and while this environment persists, they will abuse their position.

As if proof were needed...ask any run of the mill graduate if all that education was worth it....I think I know the answer.
 
Well, think boats on a rising tide...all wages will be lifted as competition for skills increases. It's the mass of unskilled workers that are effectively dragging down everyone and the employers know this...basically the employers are treating normally very skilled work in the same way as unskilled work. Their attitude is, take it or leave it and while this environment persists, they will abuse their position.

As if proof were needed...ask any run of the mill graduate if all that education was worth it....I think I know the answer.

Sounds like this may take us back to the 70s where the UK lost international competitiveness due to rising wages bill and inflationary pressures due to oil shock.

Now I guess we have a similar deflationary pressures due to oil shock and be interesting to see how rising wages bill plays out.

We are certainly on the cusp of a new era (y)
 
Disease is the cure ?

A spot of Black Death would lift wages:whistling

Consequences
It is impossible to overstate the terrible effects of the Black Death on England. With the population so low, there were not enough workers to work the land. As a result, wages and prices rose. The Ordinances of Labourers (1349) tried to legislate a return to pre-plague wage levels, but the overwhelming shortage of labourers meant that wages continued to rise. Landowners offered extras such as food, drink, and extra benefits to lure labourers. The standard of living for labourers rose accordingly.

The nature of the economy changed to meet the changing social conditions. Land that had once been farmed was now given over to pasturing, which was much less labour-intensive. This helped boost the cloth and woolen industry. With the fall in population most landowners were not getting the rental income they needed, and were forced to lease their land.

Peasants benefited through increased employment options and higher wages. Society became more mobile, as peasants moved to accept work where they could command a good wage. In some cases market towns disappeared, or suffered a decline despite the economic boom in rural areas.

It has been estimated that 40% of England's priests died in the epidemic. This left a large gap, which was hastily filled with underqualified and poorly trained applicants, accellerating the decline in church power and influence that culminated in the English Reformation. Many survivors of the plague were also disillusioned by the church's inability to explain or deal with the outbreak.

The short term economic prosperity did not last; the underlying feudal structure of society had not changed, and by the mid-15th century standards of living had fallen again. Yet for most levels of English society the Black Death represented a massive upheaval, one which changed the face of English society in a profound way.

(Taken from http://www.britainexpress.com/History/medieval/black-death.htm)
 
We don't need any black death.
Just vote UKIP stop EU freedom of movement by leaving, introduce a points system to target real skills shortages and bobs your uncle....everyone's wages rise, consumers pay more cos they can afford it, this raises inflation and interest rates and BOOSHKA , problem solved, everybody happy !
 

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Split, you are mixing up real economy jobs with govt payroll jobs again. To think that they are one and the same thing is a big mistake.

Govt payroll jobs can only ever be funded from those in private sector employment via their taxes. Anything over and above fully costed and funded govt jobs has to come from borrowing and debt. It's the borrowing and ever increasing debt that's the problem...just kicking the can down the road and never a day of reckoning. Well that day of reckoning is upon us all...and responsible govt's are trimming the public sector back to sustainable levels. What is the problem with this ? I can't see any.

There is no problem with it, except that it is not working. NHS services over Christmas are a prime example. UK is a richer country than Spain. Spain's NHS has flu problems at this time of year, but the health crisis is not so bad as in UK.

I am not praising Spain's handling of this crisis but, as a much poorer country than UK, Spain should be worse off and I don't think that it is.
 
There is no problem with it, except that it is not working. NHS services over Christmas are a prime example. UK is a richer country than Spain. Spain's NHS has flu problems at this time of year, but the health crisis is not so bad as in UK.

I am not praising Spain's handling of this crisis but, as a much poorer country than UK, Spain should be worse off and I don't think that it is.


I think its the good times of the last 25+ years causing a lot of problems in the NHS along with ageing population and a lot larger client base from everywhere using good old England's free health service

Most of the UK are overweight - Obesity is just one of the problems due the the UK having such a choice of fast food and restaurants due to higher disposable incomes of last 25 years - along with too much booze and drugs creating massive problems in A & E departments.

The Doctors got one over on Labour on pay and hours- both Labour and Tories have allowed too many managers / paperwork / and the drug companies to rip them off.

Anything free is abused - classic example being a drunk suffering with obesity with a broken finger nail wanting instant attention and a sick note for a week off work.

I am all for helping the old and the sick and the unfortunates - but not for maybe 30% who abuse and use the NHS

Regards


F
 
I think its the good times of the last 25+ years causing a lot of problems in the NHS along with ageing population and a lot larger client base from everywhere using good old England's free health service

Most of the UK are overweight - Obesity is just one of the problems due the the UK having such a choice of fast food and restaurants due to higher disposable incomes of last 25 years - along with too much booze and drugs creating massive problems in A & E departments.

The Doctors got one over on Labour on pay and hours- both Labour and Tories have allowed too many managers / paperwork / and the drug companies to rip them off.

Anything free is abused - classic example being a drunk suffering with obesity with a broken finger nail wanting instant attention and a sick note for a week off work.

I am all for helping the old and the sick and the unfortunates - but not for maybe 30% who abuse and use the NHS

Regards


F

The trouble is that the government does not seem to know how to differentiate.
 
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