So, apparently, the inflation rate for November was -1.7% - the biggest drop in prices since the '40s. People that are a lot smarter than me have been debating and calculating and basically running around like chickens with their heads cut off. Most of my investments are in nice safe money markets, but I am cursing my "guy" for convincing me to put some money into mutual funds in June, and am DAMN glad I ignored his email in August to put more in.
Even with slashed prices, people just aren't spending money - prices WILL go lower, so why buy now?? People not buying stuff is why deflation is so bad. Less demand means less money in circulation, which means prices drop even more...plunging prices sound good, and in the real estate market, my dad has been warning about a significant correction for at least 4 years. With the expected continued drop in value of everything, this correction could continue for a while, making your house worth lots less than you owe. So for me, that threat, combined with my fear of bad roofs, plumbers and black mold, it is enough to keep me in my apartment. Interest rates can't get any lower, but my money is staying in CDs for the most part!
However, I have solved the crisis, if anyone wants to know. Instead of giving all that money to the banks and car dealers, why not give it to us, BUT instead of just giving it to us to do what we want, there should be strings attached. It HAS to be spent within 30 days of receipt - use it for a car payment, or a house payment or buy airplane tickets or gas or groceries, but whatever we do, we can't just save it. In fact, maybe we can't even deposit it - it would be required to counter sign it over, to the bank for a car note, or to Safeway for groceries, or to the doctor for a check up, etc. BUT, only if you have zero credit debt. If you owe so much as $20 on your credit cards, first you have to pay towards eliminating that debt.
Wouldn't Suze Orman be proud? Why not? Another incentive check surely wouldn't be enough to get most people out of debt, but if we all got say, $500, and were all forced to put it back into the economy, wouldn't that be a TRUE stimulus? I put my first stimulus check in the bank, and earned 14 cents interest on it, then last week when I went out and got some new brakes. Wouldn't it have been better, from an economics perspective, and as a true stimulus if I, and everyone else, had used that money immediately and pumped it back into the economy?
If you can explain to me why this isn't a great idea, I would love to hear it, but please be nice. I am not a economist, and I haven't played one on stage either.
10 comments:
I think that's an awesome idea!
i thought so, but then I am hopped up on nyquil so what do I know...although I am beginning to think our leaders are hopped up on something! Drilling in Arches National Park? Are they KIDDING me???
It works for me! But I'm a moron when it comes to money and economics, so what do I know? But I trust you.
You are trustworthy, aren't you?
oh yessss very trustworthy.....
heh heh....but i am with ya on the moron part. i just don't get it at all!
Nyquil always brings out the economist in us.I will take a double dose and get back to you with my thoughts.
just give the money to me. you wont get interest and you wont get it back...but at least you will have a warm feeling knowing that it went to a truly worthy cause: ME! and all of the wonderfulness that is ME!
yah nyc hack, and the pity is, it seems that some of those held in high regard, and with lots of influence, do their dirty deeds while they TOO are hopped up on drugs!! I look forward to your thoughts, and will come see your blog - I will be back in da city in a few weeks! Yaya!!
laurie, the check is in the mail (and the christmas letter is reallllly late. do you want it mailed or via email - i ain't posting it here - too many innocent people mentioned!! Hey and I will be in your state in March. We have to get together!!
I'm in Finance and I think you're very smart to stay in your apartment. Yes, home values have about 20% more to go before they near the average price trend. Be patient, this economy is not going to improve for a while. This is going to be a long/bad one. Global markets are taking anyone or any company with debt, out back and shooting it. Save your money. SAVE IT!
I don't believe in these Gov't handouts. It's just more debt on us and our children. People need to be responsible for themselves. The overspending has been what's gotten us into trouble. We need to pay down our debts and save. The time of Leverage is officially over. I could write for another hour, but my wife is blabbin something. Sorry, gots to go!
P.S. SAVE!
thanks Moe, that is what I think - of course i have always thought it, and it was more from a responsibility perspective (as in I didn't want any) than from a financial one. Now don't get me wrong, I think PERSONAL responsibility is KEY and ought to be lesson ONE to children, but this home ownership thing is for people vastly more mature than I. I like picking up the phone, reporting the problem and then sitting back and letting it magically get fixed!! I suppose if I had a well trained husband, I could get the same response...but that's not happening....
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