The Katana: Why Deflation Isn’t Likely – Financial Samurai
I rarely discuss my personal finances, but I’m currently lowering a couple of my mortgage loans by 1% each. The savings on interest are significant, convincing me that deflation isn’t likely. This outlook boosts my confidence about future consumption trends. I know ten other people who are refinancing their mortgages too, so it might be a good idea to check out the latest rates at your local bank.
Lately, the stock market has been robust, yet the bond market remains buoyant, offering incredibly low interest rates. It’s important to remember that when treasury bond prices rise, their yields drop.
Could deflation be on the horizon? I seriously doubt it. Despite signals from the bond market, I remain confident that deflation isn’t a concern. If we play with the idea of deflation looming, logically, you might cut back on spending, anticipating lower prices in the future. This leads to hoarding cash and reducing debt, a cycle that can hinder economic growth.
You might also look for higher returns elsewhere. Currently, with bonds yielding around 2.35%, they seem like a better buy compared to the 10-year at 1.714%. When discussing deflation, remember that money is just a way to trade goods and services—the more you have, the stronger your buying power. Being frugal is back in style, and I’m looking forward to a month of not spending at all!
Here are some interesting posts I came across:
“A Teacher’s Reply To Criticism” where BFS, whose husband is a teacher, responds to criticism in a thoughtful manner. I believe teachers deserve better pay and a merit-based system to reward the excellent ones who have greatly influenced me.
“How To Simplify Your Life” by Forest offers great advice on decluttering your home, finances, and wardrobe. I despise clutter and regularly donate unused items. I buy quality clothes that last and have automated my retirement savings, which really resonates with what Forest suggests.
Darwin discusses “The 10 Dumbest Uses For Your Tax Dollars In The Stimulus Bill” in his critique of government spending. I just want to say, “Don’t mess with my Ant Talk sessions!”
Everyday Tips and Thoughts asks, “How Realistic Is It To Retire By The Age Of 40?” At 42, Kris cynically suggests starting to save right from birth. It’s a game of saving and making money, because really, we don’t need much to survive.
“Young and Thrifty” explores whether a destination wedding or a traditional wedding is more cost-effective. I enjoy both since weddings are so much fun!
So, do you think deflation is out of the question? What are your financial goals for this year? Let’s slice through the mysteries of money together!
