quote:

ORIGINAL: hlen5

http://www.youtube.com/watch?v=PTUY16CkS-k


Opinions?

quote:

ORIGINAL: willbeurdaddy

quote:

ORIGINAL: hlen5

http://www.youtube.com/watch?v=PTUY16CkS-k


Opinions?

garbage

quote:

ORIGINAL: DomKen

I stopped when the argument was that deflation wasn't bad.

So you favor higher consumer prices and higher corporate profits?

Deflation, longer than a few weeks, is worse than almsot any level of inflation we've ever seen in the US. The classic example comes from the post Civil War deflation and what happened to the family farmer. Every spring the farmer takes out a loan against the value of his crops when harvested based on wholesale prices from the previous harvest.


Obviously you have never been a farmer. If one is a farmer to make money then why must that farmer constantly borrow to stay in business.



This lets him pay for the things he needs between planting and harvest. The problem is that in a deflationary cycle his crops are worth less at harvest than they were the previous year which means he either borrows less or he makes less profit at harvest. Since deflation is an ongoing process prices in the spring and summer will not have fallen as much as they will have in the Fall at harvest so his costs are at higher levels than his eventual income at harvest. This grinding away at the earnings of producers can force them out of business quite easily. It did force many farmers and small businesses to shut down during the 1870 to 1900 period, it was a driving force behind the rise of the Grange movement as well as the violent anarchists of the era.


This from here about the grange movement
http://www.u-s-history.com/pages/h854.html
A major shortcoming of the movement was the failure to address what was probably the root cause of many farm ills—overproduction. There were too many farmers and too much productive land; the advent of new, mechanized equipment only exacerbated the difficulties. A few perceptive individuals recognized that flooding the market with produce only depressed prices further. Mary Elizabeth Lease of Kansas, one of the nation's first female attorneys, traveled to grange halls and urged the farmers to "raise less corn and more hell." Such pleas went largely unheeded, since most farmers preferred to blame the politicians, judges and bankers for their plight.

The Grange as a political force peaked around 1875, then gradually declined.

quote:

ORIGINAL: thompsonx

Obviously you have never been a farmer. If one is a farmer to make money then why must that farmer constantly borrow to stay in business.

quote:

ORIGINAL: DomKen

quote:

ORIGINAL: thompsonx

Obviously you have never been a farmer. If one is a farmer to make money then why must that farmer constantly borrow to stay in business.

Actually I come from a long line of farmers and still have many relatives invovled in agriculture.


How is it then that you seem to know so little about farming or its economics/

The reason farmers borrow money every spring is simple, when family farms made the shift from subsistence operations to ones selling crops to processors

This happened before there was a united states or a grange



they didn't have the liquid capital to buy the seeds etc., so the went to the bank and borrowed the money.

One obtains liquid capital to buy seeds etc when one sells one's crop. If you have to borrow every year to stay in business you are not in business you are a slave.

Even if the farmer had the capital on hand to buy everything he needed deflation is still a terrible thing for him. He buys everything he needs during the course of the year, paying the prices of the moment, but sells his crop at harvest time, after a year of price deflation since the last time he made any money.


Obviously you have refused to read what I posted or the article I cited because they refute all that you have said.

quote:

ORIGINAL: DomKen

Weird, I'm only basing my arguments on well known facts. But if you insist I'm wrong despite the voluminous evidence that supports me, then of course I'll change my opinion to match yours.

quote:

ORIGINAL: MasterNJ20

Not only farmers but any business could logically suffer from deflation... if prices are dropping over time and you make product C from products A and B...

A costs 10 dollars, B costs 10 dollars and C sells for30 dollars. I make 10 dollars a product. However lets say there is deflation and i spend 10 dollars on A and 10 dollars on B and then prices drop 10% and I sell C for 27 dollars. I make 7 dollars.

Now I spend 9 dollars on A and 9 dollars on B, and prices drop to 80% of the original. I sell C for 24 dollars, earning 6 dollar profit.

Now deflation doesn't occur this step-wise, but the effect should be quite clear. The person making product C is going out of business.

EDIT: It should be most noticed for farmers because they purchase seed and sell product so far apart that more deflation occurs between purchasing and selling, while a fast turn over manufacturer will barely notice the price drop between buying materiel and selling (if they notice it at all). Businesses in between fast turn over factories and farmers (such as people who craft by hand, or people who make slower to manufacture objects) will feel a moderate effect.