Everybody has their own thoughts on this, most of it waffle, to be honest.
FWIW, I think that Sackerson has just about covered it all in this brief post (with links to more background material!), see especially his reply to mine in the comments.
Tuesday, 21 April 2009
The tiresome inflation-deflation debate
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2 comments:
Looked at like this,house price inflation is wildly deflationary as it reduces people's ability to buy things in the shops.Supposedly the money they spend on mortgages eventually goes back as interest income to savers,but as these people are already fixed up with houses, furniture,cars etc(or they would n't be saving),it still leaves the young devoid of ready money and the old savers with nothing major to spend it on. (Of course this is to accept that the present predicament where old savers don't get anything and people with tracker mortgages get rebates is abnormal.In the present mad world it would be better for the old to get the money because they would spend it all on food and basics,whereas the tracker young are wasting all the money by paying off debt(apparently) and not supporting the economy ,as intended.
Shoved in my tuppenyworth of waffle on the linked blog post.
I think that this inflation/deflation debate, and understanding what they really are, is critical to sorting out what we should do, or rather not do, from now on.
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