“Although lower prices may seem like a good thing,’’ Banco de España, the Spanish central bank, says on its website, “deflation can in fact be highly damaging to the economy.’’ How so? Mainly because falling prices tend to discourage consumers from spending. Why buy now, after all, if you can purchase what you want — cars, furniture, appliances, vacations — at a lower price later?
We’re not going to buy that stuff now anyway because it’s too expensive you twits
The reality is that the economy’s health depends on steady consumer purchases. In the United States, household spending accounts for around 70% of the entire economy. If consumers were to pull back, en masse, to await lower prices, businesses would face intense pressure to cut prices even more to try to jump-start sales.
We can’t pull back en masse on purchasing groceries
In the meantime, employers might have to lay off waves of employees or cut pay — or both.
They’re already doing that! They’ve been doing that!
Exactly!
We’re not going to buy that stuff now anyway because it’s too expensive you twits
And when you have deflation, no one buys stuff, and everyone gets laid off. Then you have Great Depression Pt II. I don’t mean 1-2% RIF, I mean things like entire industries shutting down, and millions of people out of work. Right now we have very, very low unemployment overall. At the height of the great depression, unemployment rates were around 25%. Right now, we’re at about 4%. In 2020, at the worst of the pandemic, we briefly hit 15%. In the great depression, it was over a decade where it was all above 15%.
Lol, this is why hate I economists. Thanks for telling people they’re wrong for wanting things to be more affordable rather than providing economic solutions to making things more affordable. It leaves less than desirable political solutions like Trump’s fascism to step into the fray and offer something instead.
“Economists” are to capitalism what the priest class was to the feathered serpent: professional assuagers whose job is to rationalize and justify human sacrifice.
It’s probably the same economists that claimed the inflation was temporary, which would require deflation to also happen to be true…
Wishing for deflation in a vacuum means reducing demand, which typically a sign of depression in the economy.
If you want to decrease prices without collapsing the economy, you are going to need significant government intervention. Fortune doesn’t want to tout that as an option since their readers would likely be affected by higher taxes due to this.
Another article telling us we’re wrong to be pissed off about inflation and high prices. How about some more articles about wage stagnation, wage theft, and wealth inequality?
Wage stagnation is good for business to fatten their bottom line and keep inflation in check. Wage theft? Employees are dedicated and provide companies with surplus labor. Wealth inequality? Everyone not in the 1% is just temporarily embarrassed.
- Some economist
Love hearing “the economy demands you suffer”
The contradictions aren’t just going to raise themselves!
Okay, so can I have higher wages to pay the higher prices?
“No that’s inflation lol”
Economist don’t care about you and me.
If you have a son named Benjamin, they care.
Deflation means that the value of the money people owe would be increasing.
Not a concern for the university socialists whose parent paid for their university from an ample college fund. But for working class people that owe money on a car or a house this would be bad.
Since working class people typically pay their debts off an income it wouldn’t be much of a problem. It’s the investors that would be facing more of a problem as their investments would not be increasing in value with the currency.
Conversely if the wages matched inflation it wouldn’t matter much but they never do because any inflation or deflation is means for an employer to trim the wages they pay.
That’s really not correct.
Imagine you took out a mortgage, and the amount you had to pay went up each month. That’s what deflation means. This country runs because we have inflation; you can take out a loan, and with fixed payments (such as a fixed-rate mortgage), you effective payments go down each year, because the dollars you are using to pay your mortgage off have less purchasing power. If you manage to get lucky and had a 2% fixed APR mortgage when inflation hit 8%, then the bank is losing money on your mortgage. But it you have a 3% mortgage, and there’s no inflation, or 1% deflation, then you’re underwater very, very fast.
You need inflation. Period. The monetary supply needs to, at a minimum, increase with the population. If it doesn’t, then you’re intensifying the effect of concentrating wealth.
That’s really not correct.
If you don’t get a raise, inflation doesn’t help you pay bills; however, you’d have to have your pay reduced to not cover deflation and that’s much harder.
Raises usually lag behind inflation, but generally keep pace with it, more or less. If the economy is increasing in size, inflation is going up, and real wages are keeping pace, you get stagflation, which is pretty much where we are now. Wages have broadly gone up, but so have prices. This is especially a problem because the labor market is very tight right now; it’s very abnormal (broadly speaking) to see a very, very tight labor market, and also see real wages not rising. In a tight labor market, you should see costs of labor rising faster than prices as businesses compete for workers. But that’s not what we’re seeing; instead, we’re seeing corporations ensuring that they retain exactly the same profit margins.
OTOH, with deflation, your wages do get cut, because you get laid off, and cheaper labor is hired to take your place. Deflation is almost always coupled with higher unemployment.
Raises usually lag behind inflation, but generally keep pace with it, more or less.
They really don’t. Especially now-a-days.
I believe that most people have largely been seeing their wages keeping pace. It’s the disconnect between seeing their wages rise and not seeing any increase in purchasing power that’s leading people to think that the economy is bad. But–again–this is stagflation. With a combination of factors, it feels really bad, even though most people are not objectively worse off than they were. And, compared to the height of the pandemic (which was all Trump!), the vast majority of people are doing far, far better than they were. What I mean by people aren’t worse off is that you aren’t seeing a sharp rise in indicators of economic distress, like people defaulting on mortgages or car loans. But–again–it feels bad because it’s easy to remember when a box of cereal was $7 instead of $10.
When you talk about wages v. productivity, then no, wages don’t even come close to tracking.
We are seeing economic indicators of distress. Most Americans have no savings, spend closer to half their income on housing, have most bankruptcies due to medical bills, can’t pay their student loans…
You’re talking about bad financial decisions not economic distress. Yeah, people aren’t getting home loans they can default on because they can’t get the loan, it’s like 5%+ on houses 4x their value a decade ago.
You’re talking about the finance bro shit not the working class shit. Sure the finance bros are fine but it’s no wonder the working class doesn’t want to do this for the sake of the finance bros.
Since working class people typically pay their debts off an income it wouldn’t be much of a problem.
If they have to take a pay cut because “prices are lower you don’t need to be paid as much” it would be a a problem. Also the price of houses go down. Congrats you owe more than your house is worth. You still gotta pay off that upside down mortgage tho!
because any inflation or deflation is means for an employer to trim the wages they pay.
Yup. But with the deflation you get the added bonus of the value of the money you owe increasing. Upside down mortgages, bankruptcy, foreclosures, people gotta find a new place to live, fun times for everyone!
See there’s a reason a slow and steady inflation is the norm. It’s super bad to have the money you owe increase in value. But a war in the part of the world where most of the grain is produced caused grocery prices to go up a lot and drove inflation way higher than normal. But inflation is under control now. But unfortunately the inflation that already happened can’t really be reversed. Get your boss to give you a raise, join a union if you have to. Unlike nearly every time in history when this kind of thing has happened there isn’t a recession following a bout of inflation, which is pretty much unheard of. Biden stuck the soft landing.
Also deflation increases the value of money for the wealthy. Why does the socialist crowd want deflation which increases the value of wealth for those who have it? Right, because they’re too busy cosplaying as socialists they don’t care enough about the real world economic effects on the working class to bother trying to understand how anything works.
Old Joe actually cares about the working class, he stuck the soft landing (the economic equivalent of landing on the moon) and is now pursuing trust busting. The socialist and MAGA crowd (basically the same kind of people) are all mad about it.
If they have to take a pay cut because “prices are lower you don’t need to be paid as much” it would be a a problem.
Unionize so your boss can’t do that.
I think Lemmy paints a difficult picture to decipher if we’re considerate of the broader voter base.
Tin Foil Hat time! We know that Russia and China, among others, have troll farms working across social media to try to shape the narrative. One of their stated goals is to increase divisiveness among westerners. Lemmy is such a small community that it would not take much effort for them to dominate the conversation here.
At least thats what I tell myself, because I refuse to believe that there are so many people here stubbornly refusing to believe experts who have studied their fields for years. Just because I don’t understand something doesn’t mean that nobody understands it. I’m constantly amazed by people who make advances in areas that I have little experience in personally, but I know enough about the scientific community to agree that these contributions should be lauded.
Nevertheless, expect to be brigaded by downvotes for trying to bring logic into the discussion.
Imagine thinking that Russia or China would focus on manipulating opinions of a tiny community with a few thousand users many of whom don’t even live in US. It’s absolutely incredible to see how any time liberals step out of their echo chambers, they refuse to even contemplate the fact that people might have different ideas from their own.
I’m fairly certain the hexbear instance is a Chinese troll farm. My instance isn’t federated anymore, but I remember conversations with them would come to an instant halt by simply linking to the wikipedia entry on the Tienanmen Square massacre.
But yeah lemmy doesn’t have the resources to detect traffic from troll farms, so they’re bound to be around.
I think Russia has a bigger operation going on… it’s weird that people in every country in the west blame their own government for high grocery prices and no one even mentions a disruption in the world wide grain supply (the thing that bread is made out of and is in animal feed) being at least a contributing factor to inflation. Inflation on grocery prices is nearly double of that of everything else, so it feels like grocery prices are driving inflation. Perhaps a worldwide shortage of grain might be a factor? Right wing people blame the government, left wing people blame the corporations. Yeah every government and/or grocery store in the world decided to do this all at the same time.
Isn’t odd how in all of the conversations around who’s who blame for inflation you didn’t see the finger being pointed at Putin all too often?
But that’s not just Lemmy, Putin escaped any kind of blame for the worldwide inflation everywhere. Should’ve at least been discussed a little I think. I suspect Russia’s got a much more sophisticated widespread influence operation going on to keep everyone blaming everyone else except for Putin.
That being said, there are plenty of young people that do indeed say things like “late stage capitalism” all the time. Enough they were joking about it on the Pod Save America Offline podcast today… “so can you name the other stages of capitalism?” Tankie socialism is a real thing espoused by flesh and blood people in the west. I think it’s mostly just rebellious kids wearing Che Guevara t-shirts that some corporation probably profited off of.
And I’m not going to claim to be an economics expert. I minored in economics in university many many moons ago, so I know the basics about fiscal policy and monetary policy. Enough to know that Biden is doing crazy good on the economy. Wish the trust busting thing would come along a little faster, but the wheels of the government never turn as fast as we’d like.
Nevertheless, expect to be brigaded by downvotes for trying to bring logic into the discussion.
Oh noes… Not my internet points! LOL
More likely I’ll get blocked because it’s lemmy.ml Clicking post now… let’s see it it still works.
More likely I’ll get blocked because it’s lemmy.ml Clicking post now… let’s see it it still works.
Insofar as you and @unconfirmedsourcesDOTgov@lemmy.sdf.org sound like dumbasses, it works.
The socialist and MAGA crowd (basically the same kind of people)
What even is this? Horseshoe theory brainworms? Either you are with us or you are with the terrorists? You think people who want to end capitalism are the same as the people who want to maintain it?
I’m fairly certain the hexbear instance is a Chinese troll farm.
Anyone who isn’t either a liberal or MAGA must be a paid shill of a government the Atlantic Council doesn’t like this week. Not other possibility exists, thanks to two red scares and two cold wars.
I remember conversations with them would come to an instant halt by simply linking to the wikipedia entry on the Tienanmen Square massacre.
- The Tian’anmen Square ‘Massacre’: The West’s Most Persuasive, Most Pervasive Lie.
- 1989 Tian’anmen Square riots
- A Note on the Tiananmen Protests
- Images from Tiananmen 1989 the West never shows (NSFW / CW: violence and death)
- Tank Man video footage. Tiananmen Square, Beijing, 1989
.
We know that Russia and China, among others, have troll farms working across social media to try to shape the narrative.
The Blue Anon conspiracy theories never seem to end. Just today the NYT has re-shifted the conspiracy from Russia to China.
- Wall Street Journal: Mueller Doesn’t Find Trump Campaign Conspired With Russia
- Jacobin: Democrats and Mainstream Media Were the Real Kremlin Assets
- Washington Post: Russian trolls on Twitter had little influence on 2016 voters
- Jacobin: It Turns Out Hillary Clinton, Not Russian Bots, Lost the 2016 Election
- Matt Taibbi: Move Over, Jayson Blair: Meet Hamilton 68, the New King of Media Fraud The Twitter Files reveal that one of the most common news sources of the Trump era was a scam, making ordinary American political conversations look like Russian spywork
- MSNBC Repeats Hamilton 68 Lies 279 Times in 11 Minutes
- Chris Hedges: Why Russiagate Won’t Go Away
look at the profile, it’s a literal NAFO troll
Economists* are impressive for one reason only: their ability to talk while simultaneously sucking every billionaire’s dick at once.
*MOST economists.
Karl Marx was an economist.
I think you might be confusing economists with MBAs.
Every time someone says “economy” I change it to “rich fucks” in my head and it works anazingly well. Lower prices are bad for
the economyrich fucks.The economy isrich fucks are really strong right now. Inflation bolstersthe economyrich fucks…I need a bit of dark humor like that in my life, so I don’t feel too bad whenever I look at my bank statement…
This is the best summary I could come up with:
Who wouldn’t want to fire up a time machine and return to the days before the economy rocketed out of the pandemic recession and sent prices soaring?
But those incremental improvements are hardly enough to please the public, whose discontent over prices poses a risk to President Joe Biden’s re-election bid.
“Although lower prices may seem like a good thing,’’ Banco de España, the Spanish central bank, says on its website, “deflation can in fact be highly damaging to the economy.’’
If food or gasoline prices were to tumble, households would surely find it less painful to afford groceries or their commutes to work — as long as they remained employed.
But the exception was a doozy: From 1929-1933, U.S. economic output plummeted by a third, prices sank by a quarter and the unemployment rate shot up from 3% to a crushing 25%.
Those collapsing assets, in turn, can topple banks that hold crumbling investments or that made loans to struggling real estate developers and homebuyers.
The original article contains 877 words, the summary contains 166 words. Saved 81%. I’m a bot and I’m open source!
Hmm, wasn’t the crash actually caused by the stock market crashing because of overvaluation? Kinda like how everything is being overvalued now to extract every last cent out of consumers?
The deflationary spiral:
- Falling prices discourage spending (or encourage waiting to spend)
- Companies get less income, so they cut costs, laying people off or forcing people to accept wage cuts
- Workers have less spending power
- Consumer spending falls, causing businesses to cut prices just to move existing inventory
- Repeat
Falling prices might sound nice in the abstract, but almost everybody has a job that depends on someone else’s spending. If their spending drops enough, your job is in jeopardy. If you lose your job, then it doesn’t really help you that prices have fallen.
