Wednesday, 22 October 2014

The Spectre, or Otherwise, of Deflation


Here’s what’s on tomorrow night, Thursday, with our friends at the Auckland Uni Economics Group…

A new spectre is haunting the world’s financial houses, say economists.
    After decades of warning that inflation must be kept in check, and years in which central banks claim to have produced price stability -- a little healthy inflation will do you good, they say -- many economists are now fearing an imminent deflation.
    Falling consumer and commodity prices are on the immediate horizon, they say, which will lead to a deadly downward spiral from which only the central banks provide hope of escape.
    Yet falling consumer and commodity prices were precisely the result of the industrial revolution, producing the conditions that created the modern world.
    **So what's the truth about falling prices?  Can that really be all bad?
    **What are the problems of "deflation" that many economists see? And is it possible that deflation may be a blessing, rather than a curse?

Join us to discuss these and other questions.

        Date: Thursday, October 23
        Time: 6-7pm
        Location: Case Room Two, Level Zero, Auckland Uni Business School
                             (plenty of parking in the Business School basement, entrance off Grafton Rd)

We look forward to seeing you there.

PS: Check us out on the web at our Facebook page.


  1. Would it be possible for you to record these sessions and make them publically available for those who can't attend?

  2. All this talk about deflation being bad is a load of tommyrot!

    If the prices at all the shops (Whitcoulls, Countdown, Paperplus etc) in Johnsonville Mall dropped to what they were, say, 20 years ago, or petrol prices at Z down to 90 cents a litre - how is that a bad thing?

    It would lead to a considerably higher standard of living for customers, and the level of service would probably improve too.

    If this harms or bankrupts governments - so what? it serves them right for borrowing money to buy votes, instead of simply disenfranchising 90% of the population and doing the right thing policywise as I have long advocated.

    If lots of ghastly 'middle class' types end up owing twice as much money as their house is worth - that, to me, sounds a wonderful thing; serves them right for being pretentious - (and they can take their ghastly accents and values to the poorhouse, after a short trip to Bankruptcy Court).

    I have no sympathy; the important thing is the prices consumers are forced to pay and if that falls it must be a good thing to be welcomed and encouraged.

    On a more practical note - deflation provides enormous opportunities to profit from the carnage through short positions and credit default swaps, so don't hesitate to take advantage of it.

  3. Mr Lineberry

    And so now you are an expert in shorts. Somehow I very much doubt it.


  4. And as usual, Amit - you would be wrong.

    I have had great success in short selling lately; I sold December crude oil futures at about $105 and Xero at $40 and have been laughing all the way to the bank.

    I was very ill and fairly miserable during the Winter after a fall, and was bedridden for 9 or 10 weeks getting over the massive internal bleeding, but the collapse in the oil price and Xero share price, (not to mention an Ebola epidemic and its effect on a certain iron ore mine) have all cheered me up immensely! haha!

  5. Lineberry

    I doubt you made those trades. Still, let's say you did. Do tell, who did you borrow your shares from?



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