“falling inflation” means prices are still rising…the rate of increase is what has decreased. What we need is negative inflation…or said differently, price decrease.
You don’t actually want that. It encourages people to “invest” by sticking hard cash in a mattress. It rewards people for doing absolutely nothing but taking money out of the economy.
Ideal (if we’re keeping a monetary exchange society, anyway) is low (<3%), predictable inflation combined with wages increasing in proportion to productivity. We had a period of relatively low inflation followed by a giant spike, plus wage gains that are nowhere near matching productivity gains over the last 50 years, and that’s where things hurt. Capitalism doesn’t seem capable of this, however, as it’s always chasing the next hype cycle that leads to these spikes and lulls.
Cool, working class people aren’t really thriving right now anyway. Maybe an economy crash could result in a restructuring of wealth and new tax policy.
What you are describing is deflation and it’s only happened twice during the history of the United States. It is also generally looked at as a bad thing.
A small amount of inflation is healthy. You REALLY want to avoid deflation, because that means the value of your money is increasing. If people know their money will be worth more in the future, they won’t spend it, incentivized to save and sit on it. That means on average everyone spends less, slowing the economy down and starting into a recession/depression.
Gonna slap this with the good old “I am not an economist” disclaimer, juat what I remember from economics class in high school
Only problem that right now people also may decide against buying because they can’t afford it. Also, I’m not sure world is producing goods at a healthy rate either, more like we’ve got a bit of an overproduction
The idea is that deflation affects the investor class. Assuming a “healthy” 3% inflation rate, the value of your savings decreases by 3% per year. That means you lose money if you can’t invest in something earning more than 3%. Traditionally interest rates have been around 0%, which means bonds and savings accounts also pay 0%. So, your only options to not lose the value of your savings is to invest in the stock market, risky businesses, or real estate.
As a middle class person that means that it mostly affects my 401k, but for millionaires and billionaires, deflation means that they would sit on their hoard instead of investing it. Traditionally that means no funding for new businesses, inventions and ideas, and that’s also why the investor class pays much lower taxes than the working classes.
But nowadays “investment” seems to mostly be buying good companies and enshitifying them or bribing politicians, so maybe it would be better if we encouraged the rich to sit on their money instead of using it to make society worse.
Japan has been struggling with deflation (=decrease of prices) for a good 25 years now… you really don’t want that happening. Ideally you want something around 2% inflation.
You also shouldn’t purchase, since goods will get cheaper over time. Also don’t take loans for the same reasons. Basically you should take your money in cash and sit on it.
Deflation is a death spiral. China is going through it rn. The currency gets stronger, but then people wait to buy stuff like houses because it will be cheaper in a few months. It creates a snowball effect as people all start holding off on buying and selling stuff, wanting the best deal possible, or then being unable to buy things if people hold off on selling.
“falling inflation” means prices are still rising…the rate of increase is what has decreased. What we need is negative inflation…or said differently, price decrease.
You don’t actually want that. It encourages people to “invest” by sticking hard cash in a mattress. It rewards people for doing absolutely nothing but taking money out of the economy.
Ideal (if we’re keeping a monetary exchange society, anyway) is low (<3%), predictable inflation combined with wages increasing in proportion to productivity. We had a period of relatively low inflation followed by a giant spike, plus wage gains that are nowhere near matching productivity gains over the last 50 years, and that’s where things hurt. Capitalism doesn’t seem capable of this, however, as it’s always chasing the next hype cycle that leads to these spikes and lulls.
As opposed to what we have going on right now, which is to punish working class people so ruling class people can still have prosperity.
Deflation means stagnation or crash in economic terms
Cool, working class people aren’t really thriving right now anyway. Maybe an economy crash could result in a restructuring of wealth and new tax policy.
Sure. I don’t believe in infinite growth either, I’m unsure however who’d come up on top. The new aristocracy?
What you are describing is deflation and it’s only happened twice during the history of the United States. It is also generally looked at as a bad thing.
Is inflation generally looked at as a good thing or a bad thing? Ive only ever heard people complain about inflation.
If they are both bad things im willing to give the bad thing that improves my life a try over the bad thing that makes everything more expensive.
Granted i have nothing so im probably on the side of things that is least effected by the bad side of deflation.
If i can spend more money on the things i want to, it will absolutely help small local businesses near me
A small amount of inflation is healthy. You REALLY want to avoid deflation, because that means the value of your money is increasing. If people know their money will be worth more in the future, they won’t spend it, incentivized to save and sit on it. That means on average everyone spends less, slowing the economy down and starting into a recession/depression.
Gonna slap this with the good old “I am not an economist” disclaimer, juat what I remember from economics class in high school
Only problem that right now people also may decide against buying because they can’t afford it. Also, I’m not sure world is producing goods at a healthy rate either, more like we’ve got a bit of an overproduction
Yeah, obviously wages SHOULD be keeping up with inflation and inflation should be a low, stable amount. That’s the problem, not inflation in general.
What you learned in high school puts you miles ahead of 99% of these comments
People still have to spend money, hoarding wealth makes no sense if you can’t eat and pay for services and utilities.
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The idea is that deflation affects the investor class. Assuming a “healthy” 3% inflation rate, the value of your savings decreases by 3% per year. That means you lose money if you can’t invest in something earning more than 3%. Traditionally interest rates have been around 0%, which means bonds and savings accounts also pay 0%. So, your only options to not lose the value of your savings is to invest in the stock market, risky businesses, or real estate.
As a middle class person that means that it mostly affects my 401k, but for millionaires and billionaires, deflation means that they would sit on their hoard instead of investing it. Traditionally that means no funding for new businesses, inventions and ideas, and that’s also why the investor class pays much lower taxes than the working classes.
But nowadays “investment” seems to mostly be buying good companies and enshitifying them or bribing politicians, so maybe it would be better if we encouraged the rich to sit on their money instead of using it to make society worse.
I have no idea what this is in reference to
Japan has been struggling with deflation (=decrease of prices) for a good 25 years now… you really don’t want that happening. Ideally you want something around 2% inflation.
What are the issues with deflation other than that people wouldn’t want to invest in whatever is available?
You also shouldn’t purchase, since goods will get cheaper over time. Also don’t take loans for the same reasons. Basically you should take your money in cash and sit on it.
That falls apart with necessities like food and medicine, doesn’t it?
Deflation is a death spiral. China is going through it rn. The currency gets stronger, but then people wait to buy stuff like houses because it will be cheaper in a few months. It creates a snowball effect as people all start holding off on buying and selling stuff, wanting the best deal possible, or then being unable to buy things if people hold off on selling.