[Antiacus]

If money tightens up and people hold on to more of it... do businesses increase prices to protect their profit margins or do they cut prices in hopes of selling more?

In a scenario where people are holding on to their cash and businesses are cutting prices don't we then have deflation?

 

[Northern Wisconsin]

In a scenario where people are holding on to their cash and businesses are cutting prices don't we then have deflation?

Yes..../..

 

[Kregener]

MY guess is they will slash prices, but neither tactic will work as America is tapped out and teetering on national bankruptcy.

When the dollar finally does implode, all bets are off.

Chaos will ensue.

 

[Brother Buck]

Well, sort of, so long as the money changers are not artificially inflating the supply such as the case.
You can have both deflation and inflation simultaneously.

 

[TacomaJPP]

Supply and Demand - The supply goes up, the price goes down. However, don't expect this to trend overnight. It takes months for the trickle down effect to take place.

 

[BudgetSurvivalist]

People in Japan holding too tight to their funds has caused deflation for at least a dozen years, and their economy is suffering for it.

 

[ken]

hyperinflation comming soon to a country like ours

You are correct, its deflation, but it wont last.

As more funny money is pumped in it will soon slip into stagflation. Then the next crisis hits will need more money created to bail someone out, and eventually it will be hyper-inflation. This year the money supply has probably almost doubled, so your money has dropped in buying power by half, something like that.

Next year I expect the whole world to go on sale.

 

[ken]

think about it

There is a good photo on the Internet, of a woman in Germany putting bundles of bank notes in the heater to burn.

I will try to link in a photo, hope it takes. Regardless, this is what is happening in the photo, think about it.

Burning the piles of bank notes produced more heat than the amount of coal or wood the money would purchase.

 

[TacomaJPP]

There is a good photo on the Internet, of a woman in Germany putting bundles of bank notes in the heater to burn.

I will try to link in a photo, hope it takes. Regardless, this is what is happening in the photo, think about it.

Burning the piles of bank notes produced more heat than the amount of coal or wood the money would purchase.

This happened when Germany begin printing more and more money to fund their war efforts. Does this sound familiar??? Hmmm....

 

[melody]

Right now stores are lowering prices, with the hopes of selling enough product to pay their bills (rent, utilities, mortgages, debt, employees, etc). Which is why there are some pretty good sales out there. Even if they paid more for an item then they sell it for, they have to take the loss with the hopes of staying in the game.

Unless of course the store has something that everyone wants that is in short supply, then they can still raise prices. Things like certain food items, guns, and ammo are raising in price.

 

[NEWGUY556]

The company I work for has changed from trying to turn a profit to keeping the doors open. More companies will need to do the same to stay in business. A business will need to generate a certain level of sales just to cover overhead. Raising prices will hurt sales at this point.

 

[mongoose]

if people stop buying (just like they have) then business will drop prices to where they will start spending again (just like they have)

business cannot made money at prices that people will not buy at.

 

[1eaglescout]

We are holding our prices steady. My Dad and I own a small plumbing company but the fact of the matter is we have to charge a certain amount to keep the doors open. Will it work? I have no idea, maybe not. I do know that our prices from the wholesalers are either going up or staying the same, how can we discount?
The good news is the local Sheriffs Dept offered me a job if {big if} I decide to quit plumbing.

 

[skifast]

Currently,we are in a disinflationary/deflationary environment. The Great Depression was characterized by deflation, so it is not a good thing. Prices come down, but so does the value of your assets, i.e. real estate, investments, etc.

The government has opened up the printing presses, but it has not resulted in inflation, yet. I think the reason for it is that the banks are not lending the money out. The government will pressure the banks to lend. When they do, you will see inflation heat up. Banks loan out more money than they have. They are required to keep $1 in cash for every $10 of loans. So when they start lending the bailout funds, a lot of money will hit the streets and inflation will result.

 

[tx_star]

I have a question. In January Obama is going to ask congress for a mutlibillion dollar stimulus for infrastructure. If America is almost bankrupt, how can he get this much if the nation is on the brink of bankruptcy? How can they keep bailing these companies out?

 

[mongoose]

If ya cant borrow it ----- print it

result will be the same, it wont stop the fall anymore than FDRs spending helped in depression.
all it will do is set up future inflation, after a deflationary rec/dep ression