So, inflation. Prices and paychecks go up (though not toe-to-toe), and money loses value because it takes more money to buy the same thing than it took earlier. We hate it when it's high because prices go up, everything's expensive, we can't buy shit. Consumers cry. However, the opposite is just as bad.
Low inflation means prices aren't going up much, or at all. Consumers cheer. Very low inflation, however, close to 0% or even negative (that's deflation), is a problem. If prices start dropping, rational people will hold off from buying stuff because they'll wait for prices to go even lower. That can and will kill businesses because they don't get any revenue when people aren't buying stuff. And when business isn't booming, it can mean layoffs at your local grocery store or something, because business owners also want to save money.
Another thing where inflation has meaning, is debt. Mortgages, leases, etc. Even the 10 bucks you owe a friend. If inflation is high, those debts start having less impact on your money because by then you hopefully got a small raise, and so debts are easier to pay off. Low inflation makes debts bite just as hard, and much harder if deflation happens, because bread being cheaper doesn't mean your mortgage payments will be smaller.
Anyways, quick crash course on inflation done, hope you learned something. More educated Peters pls correct me. Barely educated Peter out.
I think the main difference that people forget: discretionary vs mandatory spending. People are currently being killed by mandatory spending (housing/rent, food, healthcare, gas/transportation) to the point that their discretionary spending is all credit or avoided entirely.
The price gouging since 2019 has been extreme. Companies have inflated prices to what the market can and will bear. Look at fast food; the value proposition has completely collapsed. Automobile prices are insane.
This is the find out phase of FAFO: when no one has any money to buy your shit. You either carve out a niche of consumers who spend more per transaction, or attempt to rebalance towards more consumers and less per transaction.
Unfortunately, consumers are hurt on both sides of our economy (rampant inflation/stagnation of wages, and recession). Those with assets will profit when we print more money, and by buying up the lost assets from the working class at discount prices.
Makes you wonder who the economy is meant to be working for.
The discretionary vs mandatory argument is exactly why all of the deflation fear mongering is bunk.
The country inflated so fast with minimal actual wage increase that it could bear a fairly significant deflation and it would be more of a correction than an issue.
You're thinking of deflation as a singular event where prices just go down and then they're lower and the issue of over-inflation relative to stagnant wages is corrected.
That's not how deflation actually works though. Deflation is often an economic death spiral, and that's because of the reasons for it. Deflation doesn't typically happen as a response to previous inflation.
Deflation usually happens because some part of the economy is collapsing. People stop buying products (yes they still buy basic food if they can, but that's not all the economy needs to function), which leads to reduced production, which leads to layoffs, which further impacts the public's spending power, which leads to even lower purchases, and even lower production, and so on.
It's a vicious cycle that is almost impossible to break out of. It leads to severe economic depressions, which are worse than recessions.
What we need is disinflation (a reduction of the inflation rate), not actual deflation. Deflation is a disaster 99% of the time.
I would argue that the labor market is already running so thin that layoffs would be minimal outside of full on business closures, which seem unlikely given margins.
I think the kids are disillusioned because as much as the system is currently "working", it is producing outcomes that are horrid for subsequent generations. Working 40 hours+ a week to not be able to afford living alone, saving, affording healthcare, or buying things you want.
Not to mention corporations laying off 1,000s, whilst doing stock buy backs.
What's the point of participation if the system excludes you whilst actively participating? You can't budget your way out of the income to expense ratios we currently have; people are falling behind despite participation. There's no incentive to participate when federal policy ONLY helps those with assets. 10 year boom and bust cycles have produced a shrinking share of wealth for the majority, whilst we have massively inflating fortunes for the top micro percentage.
The issue is that when people explain to them why their idiotic suppositions on the supposed benefits of deflation, they don't listen to people who have actual lived experience with it.
It think it's more so that older generations have more to lose, and thus protect said system. You have assets: housing, retirement accounts, etc. Younger generations are suffering under said system, own little to nothing, and would like the outcomes to change - preferably asap. The gap between compensation and costs are not the same as when previous generations were the same age/place in life. It isn't budgeting. It isn't will. It isn't lack of trying.
Shouting "deflation bad!" when someone is pointing out that the purchasing power of the many has shrunk significantly due to inflation, does little to address the underlying issue/causes, or that a correction of prices (in theory) would actually benefit the majority of consumers.
It amounts to "line must go up, line go down - bad. No other option, sorry." There has to be a major correction to something to improve the quality of life for people. Pick one: increased wages, reduced costs, increased entitlements.
Everyone screaming about inflation says they would love if prices go down, but you ask any of them if they'd be willing to take a huge pay cut or get laid off from their job to see grocery prices go down and none of them are going to make that trade. But these kids seem incapable of making that conceptual connection.
I just want to point out that during the Biden years, wages, especially for the lower order of jobs, increased way faster than inflation.
And despite this, young people decided to swing towards Trump in 2024 in a iirc 10 point shift right.
And what did that accomplish? Things are so much worse than they were 2 years ago. Turns out throwing a brick at "the system" won't magically make things better. Asking for things to 'change' doesn't necessarily mean the change will be positive.
Well, right, because then they'd still not be able to afford said goods. There's not a direct correlation to compensation and the inflation we've seen since 2019; if there was a guaranteed reset of wage to cost ratios that are more beneficial to today's, most people would take the trade of some pain, because they're already experiencing some pain. They're already forced to the economic sidelines, with no benefit coming from said system.
Anyone who voted for Trump to improve their quality of life must've been completely asleep during his first presidency, too apathetic to care, or propagandized. Bidens landing out of COVID was better than any corporate media narrative gave the admin credit for.
It's more so inline with systems thinking: if the system produces these outcomes, the system must change or have some change enacted on it to create more equitable outcomes. Nothing DJT proposed was set to do that, so I can't speak to motivations for voting for him. People felt disempowered, and a con man offered them scapegoats.
"If we're to prosecute all of the pedophiles in the Epstein files, business leaders and global elites would be implicated, hurting the global economy - thus we won't." When the system refuses to enforce accountability, or change for equitable outcomes for those participating, it's really no surprise they want the system to change. Status quo thinking doesn't help young people get out of the current economic conditions locking them out of participation.
I guess I feel this overly optimistic. Companies will canabilize themselves before they lose profits. We'll see millions layed off and bankrupt before any positive change is enacted.
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u/BalticHorndog 9h ago
Hi. Barely educated Peter here.
So, inflation. Prices and paychecks go up (though not toe-to-toe), and money loses value because it takes more money to buy the same thing than it took earlier. We hate it when it's high because prices go up, everything's expensive, we can't buy shit. Consumers cry. However, the opposite is just as bad.
Low inflation means prices aren't going up much, or at all. Consumers cheer. Very low inflation, however, close to 0% or even negative (that's deflation), is a problem. If prices start dropping, rational people will hold off from buying stuff because they'll wait for prices to go even lower. That can and will kill businesses because they don't get any revenue when people aren't buying stuff. And when business isn't booming, it can mean layoffs at your local grocery store or something, because business owners also want to save money.
Another thing where inflation has meaning, is debt. Mortgages, leases, etc. Even the 10 bucks you owe a friend. If inflation is high, those debts start having less impact on your money because by then you hopefully got a small raise, and so debts are easier to pay off. Low inflation makes debts bite just as hard, and much harder if deflation happens, because bread being cheaper doesn't mean your mortgage payments will be smaller.
Anyways, quick crash course on inflation done, hope you learned something. More educated Peters pls correct me. Barely educated Peter out.