“But deflation can hurt economic growth, as consumers will delay purchasing products if they think they will be cheaper in future.”
Not if people are already mostly only buying what they need to survive.LOL. “I think I’ll starve because I bet I can save 3.5% on food prices in a month”
deleted by creator
"I think I’ll let my food rot in my broken refrigerator because I can save 3.5% on fridges in a month”
LOL. Gottem!
I mean, if it discourages people from buying new fridges when their old one still works that’s good actually. A fridge that gets thrown out is just a waste, it’s only due to braindead capitalist logic that this looks like growth.
deleted by creator
Why don’t you want a smaller market for fridges? It’s essential product, but sustainable business if you can sustain yourself by providing services and repairs
Which is not the case for most people and certainly not the case for businesses and banks.
You’re being downvoted but the amount of people I see in my work and personal life that barely make ends meet but are buying garbage on Amazon constantly is staggering. Prime days especially I was shaking my head at people bragging about the deals they got.
I don’t even think you need to go to that. The vast majority of spending is discretionary. Is Jeff Bezos new yacht an essential? Deflation is particular bad for workers because it means less investment and lower salaries for those with a mortgage that’s even worse. The people that benefit are those with huge stockpiles of cash.
This only really applies if it isn’t just temporary though. It’s also pretty for central banks to fix.
Huge stockpiles of cash seems a rather useful thing in all situations, to be fair.
Individually sure but as a society we want investment into productivity stuff rather than just increasing bank accounts.
So this economy was design to feed dragons, and then depend on those dragons spending money for the majority of people to even survive.
They don’t need to spend money but you want them to have to invest money and not just profit by keeping their money in cash.
With all of this deflation, how is China supposed to send more balloons?
They’ll just start buying cheaper balloons from China.
F22 doesn’t want to be fed. F22 wants to hunt.
Underrated comment!
In an economy as tightly controlled as China, how much does deflation even matter?
Also I wonder how everywhere else having inflation will interact with this. Is China just getting affected because the rest of the world can’t afford basic necessities anymore? The article kinda touches on reduced demand from countries with inflation abroad causing this, but also doesn’t really explain anything other than going “lower number is uh bad”
Removed by mod
Nah, that is liberalism. https://thenextrecession.wordpress.com/2023/08/02/china-consumption-or-investment/
it matters to the people whose lives it impacts, and they’re not going to be happy about the impacts… of course deflation can occur… they will try to use artificial means to control it, but they will still have to choose how to pay for things… they can’t produce things for free just because the economy is controlled… it’s a dire circumstance for them as their property market collapses, and unemployment is at insane levels… deflation is a nightmare in that scenario, because it is the further contraction of an already faltering market…
If the deflation is just a market correction after exaggerated inflation (retailers raising their prices more than general inflation to increase their short term subs) then it’s no big deal. Prolonged deflation can be bad, as that causes too much saving and not enough spending, which can really hurt the economy and people because of how it takes money out of circulation.
In an economy, the more money can circulate, the more good it can do. I use my salary to pay for for and things, that money then pays the employees of the businesses I went to, and those employees also spent that money, and so on. At each step, both participants normally get a net benefit: I can eat, and the employee can also spend the money they get from me to eat, etc. As long as the money circulates, it keeps doing good. When it stops circulating, due to being put into savings, investments or real estate, it stops doing good (or it does less good). The cycle slows down or stops.
That’s why a small amount of inflation (maybe 1-2% ? Not sure what’s optimal) is actually healthy, because it puts pressure on people with money to spend it before it loses its value, instead of hoarding it.
This is the opinion of most macro economists today, but it’s not universally accepted. Macro-economics is not nearly as scientific as micro-economics, and some people will say that its models are just about who can tell the most convincing story (or the story that’s the most convenient for those in power)
There are some people who point out that things like electronics have been undergoing rapid deflation for decades and this has not caused people to stop purchasing them. The economy is a chaotic system and anyone who claims to be able to predict it’s outcomes is selling something
“Won’t someone think of the retailers?!”
Guess which political economic form can handle price deflation gracefully (hint, it’s not capitalism)
Ah yes, China, the city on a hill of Socialism where striking FOXCONN workers are beaten by cops.
LOL, imagine a socialist country where workers needed to organize to create adversarial relationships with other workers. Shake that liberalism from your brain. Unions are an organizational form against capitalists, a protorevolutionary form that wins through threat of harm to the state. No socialist country needs to have unions, because a socialist country is one in which the state is organized in accordance with the long-term interests of the workers as a class.
k, I will tell that to those FOXCONN workers that their system is perfect. I’m sure they will love that.
Cool, let them know that you know what’s best for them and that they should organize themselves in a protorevolutionary formation and threaten to withhold their labor from society. You know best!
I think they would know what is best for themselves considering all those strikes they were doing.
And unionizing wasn’t it
I’ve read your posting history so I’m just going to cut it off here, we are both wasting eachothers time.
deleted by creator
I don’t think you need an economist to understand why it can quickly lead to a runaway disaster… Imagine you see a car price going down every week by 1k, do you buy it this week or next week? The competitor what do you think they need to do to compete? Lower their price too but wait everybody is waiting for next week, so literally nobody is buying anymore … So as a company you just start to fire people or close shop as quickly as possible, so a lot of people are now on the market so their labor value also goes down, ie. the salaries are dropping… This tsunami of jobless people would they buy a car this week you think? So companies need to continue dropping the prices…
Except if you think even a few more depths about this… you would understand people have needs. I would be happy to buy a car now if I need it now and can afford it. Your argument only works for goods that are not a necessity to life.
Sounds like an investor’s problem.
I buy a car if I need a car, not because I want to opportunistically ride the market dips so that I’ve eked out a profit once the economy’s gone back to being unsustainable.
Besides, consumers get ripped off by bad deals all the time.
Imagine seeing a car price go up every week. Interest rates go up a full point every 6 months. Next month you might be able to afford it but next month it’s gone up 4k and another point.
Companies are making money and people keep buying cars so they keep increasing prices.
I get your point but when you as a person are removed entirely from the equation then you no longer have a stake. How many Americans have no savings, no investments and work a miserable job that doesn’t pay the bills? Do you think they give a fuck if it all comes crashing down? They probably do but a lot less than everyone else.
Exept the government swoops in and gives a cash injection
These would be problems if China had a liberal economic model. Fortunately they have whole process workers democracy, and these things aren’t really problems at all.
Anybody who uses democracy in the same sentence as China is a plant.
photosynthesis intensifies
Removed by mod
I have been feeling an awful lot like an aloe vera lately.
In any case, if you’re interested in learning more, here’s a great place to start.
Because you get applied to sick burns?
My last two brain cells dying after seeing half of the comments saying that deflation is actually good.
To be fair… us common folk keep hearing stuff about the economy… but the only outcome at the end of the day is we get screwed in higher prices, lower wages, fucked up climate for our kids. People get tired pretending this Economy isn’t rigged by wall street and the U.S Govt or people close to it.
This is the best summary I could come up with:
The Chinese economy is expected to have slipped into deflation amid signs of a faltering post-pandemic recovery, according to market forecasters.
This means retailers who stocked up on goods expecting a surge in demand after pandemic restrictions were lifted are now under pressure to cut prices.
Homin Lee, senior macro strategist at Lombard Odier, predicted July’s CPI inflation report could show “outright deflation”, with prices slightly lower than a year ago.
In the UK, consumer prices were 7.9% higher than a year ago in June, as households suffered a long run of falling real incomes.
Trade data released on Tuesday showed that China’s imports and exports both fell more sharply than expected in July, adding to concerns over the world’s second-largest economy.
Jim Reid, strategist at Deutsche Bank, said the trade data highlighted that the Chinese economy is being “dragged lower by weakness in global demand and a domestic slowdown”.
I’m a bot and I’m open source!
What’s up with this weird jump in cpi? And what did China do Differently to us to not have high inflation?
Investing in productive forces and quality of life for all makes for robustly strong economic indicators and basically no inflation problem. Cutting rentierism and in large part private profits out of the economy greatly helps these figures as well, and cuts off inflation at its source.
Quality of life for the capitalist eastern seaboard. I believe that’s what you meant to say.
Not at all, I say what I mean and mean what I say.
There are some links in the study guide I linked in my other reply which go into the incredible improvements in material conditions for all Chinese peoples.
Improvement in material conditions is when 60% of rural Chinese do not attempt high school, and 7% attend college, and their hukou caste system traps them in their birth villages forever?
They didn’t pump hundreds of billions of dollars into the free market?
Look at the 5 year view to see the jump
Do you think china’s market is free? If so, the stated owned companies are the ones carrying the debt. Not sure how different that is to a state having the debt.
https://www.cnbc.com/2021/06/29/china-economy-charts-show-how-much-debt-has-grown.html
And what about my other question. Where does this jump come from?
Turns out, it’s advantageous to loan out money when global interest rates were dropping to about 0. Who woulda thunk?
What are you talking about? China was never at 0% interest. What does that has to do with the previous comment?
The principle being, lower interest rates lead to more debt because spending is less expensive.
