Low inflation might be the first step towards deflation. Many economists would argue that deflation is a worse situation for the economy because it leads to a sharp drop of consumption and therefore a huge recession follows?
Deflation is “bad” because it leads to an economic death spiral, and there’s no way to stop it.
Prices go down
People see prices going down and hold on to money thinking it’ll be cheaper if they wait.
Less purchasing despite lower prices cuts profit margins, so producers produce less.
Sellers lower prices more in a desperate attempt to make SOME money.
Repeat.
This usually leads to layoffs to try to salvage money, big sales to get rid of inventory, then eventually there’s nothing to buy, no one making it, and everyone loses their job.
Interest rates don’t fix it, taxes don’t fix it, you just cross your fingers and hold onto your butts
Thats the thing, the investor class is all economists care about. They know you and I will buy groceries, pay bills, and buy a new car when ours breaks. They worry that money at the top will stop moving around, and even though that money isn't the real economy, it's what economists are paid to focus on.
The goal of this system is to maintain oppression of the working class. Inflation hurts us by making us work harder each year to afford less than the previous year, so its good for capitalism. If we can work less and afford more, that's bad for capitalism. When that starts happening, the wealthy freak out and start enacting measures to deliberately hurt us more so we go back to working more for less. The core issue with deflation isn't that its actually bad for anyone who actually works for a living. The problem is that its good for people who work for a living, but bad for people who steal money through investing for a share of the profit.
An economy that focuses on people who actually work for a living finds ways to drive down prices so they can afford more and enjoy more. We dont live under that kind of system, so we just get paid less and suffer more.
I don't know how this anti-intellectual slopulist drivel got any upvotes.
Economists care about the economy. It's what they study. It's an ecosystem and investors are just one part of it.
Inflation is bad for the wealthy. They now have to risk their money and can't just put it in a vault. Their wealth decreases if they don't put it to work and risk losing it.
Deflation is awesome for the wealthy. They already have a ton of money and now it's worth more. They get richer by doing nothing, and their power grows as the supply of money shrinks. A true deflationary spiral would end in some sort of feudal system with the wealthy holding more power than they do now.
At no point in the history of mankind has the average citizen had this much purchasing power and control of their financial status. It's not a perfect system, but it has lead to historical prosperity for regular people.
That's not true though. It's good for the people who have savings and can afford to hold their money. While the working class has higher spending power today, the money they spend today is devalued tomorrow.
Meanwhile, lower volume of purchasing (due to speculation on further deflation) incentivizes lower supply in an effort to fight deflation, which leads to job losses. And job losses lead to less spending, which leads to lower supply, which leads to job losses... you get the picture.
So in a very short-sighted view, deflation is good for workers because they can buy more pizza than they did before. But 6 months from now, you'll be jobless wishing you didn't essentially spend 10k bitcoins for a pizza. Meanwhile, the rich guy who just sat on his money will be worth way more, even if they did nothing.
An economy that focuses on people who actually work for a living finds ways to drive down prices so they can afford more and enjoy more. We dont live under that kind of system, so we just get paid less and suffer more.
Shallow and factually incorrect nonsense. Effectively every single consumer good has become cheaper, more accessible, and more advanced over time. Unless you're arguing that the average person today consumes less and has less than at any point in our history?
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u/StuartMcNight 9h ago
Low inflation might be the first step towards deflation. Many economists would argue that deflation is a worse situation for the economy because it leads to a sharp drop of consumption and therefore a huge recession follows?