The prices only go down when people don't have enough money to buy things.
isn't that where we are now? I mean kids aren't moving out of their parents house. And everyone has either multiple roommates or multiple jobs. Tech is laying off, and no one is hiring.
There's a penalty for hanging on to money. Banks would essentially be fined for not loaning money out, so the net result is insanely low-to-zero interest for borrowers.
The problem is, of course, if the downturn is that bad, you have to weigh having money in reserve that takes a penalty versus loaning it out and losing it all.
"You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Well your money's in Joe's house. That's right next to yours and in the Kennedy house and Mrs Melan's house and... and a hundred others."
Yup. Even decades later the system is the same. If I went to my local bank to withdrawal all my money, it's extremely unlikely they'd have enough to cover it unless it was a prominent bank in a fairly large urban center. And that's just one person. Hell, most banks don't have liquid assets to cover all their customers cash if they all start pulling it out.
As soon a they said that this scene popped into my head. I've seen this movie hundreds of times. It's my dad's favorite. He'll watch it any time of year.
Possibly and probably for those who understand what ZIRP or negative real rates implies.
Having money in a savings account would be silly. The value of a dollar today would be more valuable than the value of a dollar tomorrow in such a situation.
No, WEEEE wouldn't see negative interest rates, billionaires who need to constantly move commas around a spread sheet would. WEEEEEEEEEEE would still be getting fucked over.
Which, incidentally, would also materially bandaid the US debt crisis for a few years without changing spending policies. The US would refinance a bunch of expensive / high interest treasuries with near 0% rates and let the money printer keep going.
It's funny because I think the regimes goal was to drive UP inflation to reduce the cost of servicing the existing debt and THEN collapse the economy to lower rates. The might have failed at part 1, but perhaps were successful with part 2.
Deflation will happen when boomers start to retire enmasse and pur imaginary stock prices dont have the liquidity behind them for people retiring... only magically for more circular investment between the same 6 companies.
I doubt it'll be a sudden change though. At least not until it hits a breaking point and the public gets wise and tries to get what they can from it.
Oh it'll SEEM sudden, but there will have been thousands of economists ringing alarm bells well in advance while the politicians pull the curtain closed and say everything is fine, right up until the whole thing crashes. And then it'll be a "Who could have seen this coming? It's not our fault!"
Sometimes people need some number to understand what happens when deflation happens. There’s 2% deflation and that seems close to zero or healthy inflation. Doing some google fu I found out that profit margins on wheat farms are in the 1-4% profit margin. At -2% inflation all the farms in the 1% profit margin can now double their profits by not farming. As someone without the means to grow my own wheat this is a problem for me.
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u/Mayor_Death 6h ago
Is deflation a cause or symptom, though? To me, it’s just a number, but I understand that it is more than that to various economic groups.
As far as I understand it, deflation indicates that prices are going down, which is a good thing to me individually.