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.
“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!
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.
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.
"Economists" are to capitalism what the priest class was to the feathered serpent: professional assuagers whose job is to rationalize and justify human sacrifice.
I mean thought it was temporary. It wouldn't require deflation, just market forces to rebalance. I also didn't think corporations would go hog wild raising prices...soooo....yeah.
Every time someone says "economy" I change it to "rich fucks" in my head and it works amazingly well. Lower prices are bad for the economy rich fucks. The economy is rich fucks are really strong right now. Inflation bolsters the economy rich fucks, this move would destroy the economy rich 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...
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?
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.
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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.
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.
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.
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.