Ok but after covid, prices skyrocketed compared to pre-covid levels and we got massive inflation. Wages didn't suddenly skyrocket at the same time, hiring rates didn't go through the roof, corporate profits did though. So why would prices suddenly returning to pre-covid levels require everyone to be fired and customers to disappear when the economy was working great before? Would it just be that companies would start mass layoffs to prevent a short term decline in quarter on quarter profits which would start a negative feedback loop?
Because of how corps react to lower prices. They would just lay everyone off. Deflation itself isn't the issue, it's how little protections actual working people have and how much incentive corps have to keep their stock price high. Being able to sell something for less means less profit for the corps which is a big problem for corp leadership. So the solution is to temporally increase profits by getting rid of staff.
That's because consumer spending is starting to go down and families are starting to cut back. So they have to either increase prices, which they're already doing and that's not working, so they have to cut costs, and the number one way for companies to do that is to cut employees.
Yes, the record profits are because they keep cutting the cost of labor by cutting off employees.
Sorry if my original comment didn't make sense. I'll try to explain it differently. Companies right now are raising prices. Every time a company raises prices, no matter the industry, people will stop buying it or buy less of it. But they need to keep making more profits, that's the American growth system.
So, they are continuously cutting more from the workforce, whether that is firing employees, laying them off, or replacing them with cheaper workers while letting go of all the better-paid ones. That way, the profits are steadily going up on a chart, but they are still laying off more and more people while raising prices.
To add; productivity has hit a sort of "critical mass" where corporations can over-produce goods (cheap) so easily that the only way they can cut the base expenses is to cut labor. There's no other way to increase profits in an over-saturated market.
Think about the constant "new flavor" for snack foods, beverages, fast food, etc. The market for the "standard" flavors is so saturated and the market tolerates only so much price increases before people stop buying - so by making their normal everyday product seem "limited" or "exclusive" they trick consumers into buying more..................
........when consumers are still buying less, the only other recourse is to cut those labor costs and over-work the remaining staff.
Ahh ok so basically it all just comes down to corporate greed determining how much we should all suffer and be punished for even considering the idea that their stock price doesn't have to keep going up every 3 months and that they might be able to survive on 5% less profit this year compared to last year. Got it.
Keep in mind this is just the tip of the iceberg. Corporations actively lobby for these policies that ensure they get protections and bailouts while workers and citizens foot the bill and they largely get passed as a result of things like Citizen United, and that these lobbies also own and operate the media, which makes them the Kingmakers of your elected officials.
In history classes, we typically call this form of Oligopoly “Feudalism”, not Democracy.
The rich have gotten so rich they have essentially taken over the most important parts of government, and they’re using that power to funnel your tax money AND spending money directly to themselves.
If you sit around and complain, nothing happens. That's just nature, the strong ones get to live.
Nobody is stopping anyone from joining the corps or open a business. Unfortunately, those without talent or unlucky have to live at subsistence level. Communism doesn't work.
I mean sure, nobody is stopping anybody from opening a business or joining the corps, but we can’t all do that, if we all did society wouldn’t function. So isn’t the model in and of itself flawed? Sounds to me like Corps just need to give back to society more, whether that’s directly sending funds, or helping restructure things for the better for the “commoners” if you will.
I feel like people don't realize when a corp posts their profit, that number is after it's already paid all its employees, built new warehouses, etc.. They're kinda just removing that money from the economy and sitting on it.
"The strong ones get to live get to live" isn't an argument for capitalism; it’s social Darwinism.
"Anyone can start a business" doesn’t answer the criticism that concentrated wealth can buy political influence and shape the rules in its own favor. Jumping from "oligarchic capture is bad" to "communism doesn't work" is such a spectacular non sequitur that it practically proves the point about ideological conditioning.
Yup. Though in a very real sense it is less corporate greed and more individual greed. I don’t think any of these cunts need the unreasonable amount of wealth they have accumulated: https://www.forbes.com/billionaires/
I’d say it’s more the focus on short term results and the knee jerk reactions than boiling it down to just greed. Corporations are going to be “greedy” by default, but the current incentive structure is so focused on immediate term profitability they take actions that are with little thought to the long term health of the company or economy at large.
To me, a lot of it is upper management trying to save themselves. Their job is to make profit/stock price go up, and if that doesn’t happen, their job is on the line. So a quick way to make more money is to cut the most expendable expense which is labor, even if it’s a bad idea in the long run. These guys don’t think about the long run, by the way, it’s 5-year plans at best.
You're right, but the problem arises when even corporates are the similar engine that if their revenue drops, they cease and another takes over.
It's the playing in debt system. Everyone is borrowing money from the future to use now, and when the inflation drops, everything follows the same rate. It all started when FIAT currency was introduced, or maybe it was introduced because they already put the debt system in place and gold standard couldn't handle the amount of debt w/o breaking away from it. Who knows?
But isn't the reason people aren't buying as many things due to the high prices? If prices go down and people have more money to spend don't they naturally just end up buying more things like when the government provides stimulus cheques? I used to buy heaps of random treats for myself when it was affordable, new shoes all the time, new suits for work each summer/winter, random shit I saw on Amazon I liked, stuff for my hobbies etc. Now shit is so expensive I'm wearing my old suits until they literally tear and become unwearable, I haven't bought any new sneakers in at least 2 years, I only make essential purchases on Amazon and my hobbies have sat dormant because I just can't justify spending the money because rent, bills and groceries are eating 90% of my paycheck. If prices went back down to 2019 levels overnight I'd start buying more shit almost immediately. So I'm just confused how higher prices are better for the economy than lower prices.
So I'm just confused how higher prices are better for the economy than lower prices.
It helps to remember that "the economy" as the media defines it means "rich people's money." Not our money. As long as the stock market is going up, "the economy" is good. It doesn't matter if the rest of us are living in poverty, especially now that the stock market has fully decoupled from actual company performance. Tesla could shut down all its factories and never sell another car again, and the stock price would only drop like 5% before turning around and going back up again.
If prices went back down to 2019 levels overnight I'd start buying more shit almost immediately.
If a 40% (!!!) deflation happened?! No, you wouldn't, because you'd have no money because you'd have no job. Oh and also enjoy your student debt/mortgage being almost doubled! That would be a crisis far beyond the Great Depression, probably the collapse of the Western world.
The whole point of my comment was not "I don't think people would lose their jobs" but more "why would people have to lose their jobs" when a massive price drop would promote a huge amount of spending and economic activity when right now people are very limited in what they can afford outside of essentials. It's asking why did the economy work perfectly before covid at 40% lower prices and why would the economy basically explode and self destruct if prices went back to those levels and companies just made a bit less profit. If a company had 1000 staff in 2019 and was profitable and making good money, now they still have 1000 staff and are making way better money without any significant increase in labor spending as we all know wages haven't been going up, why would they need to suddenly fire half their staff if they had to go back to only making "good" money and not "great" money if firing all their staff just turns into a negative feedback loop if all the companies do it and now no one can buy anything. Isn't it better for companies to not just look towards the next earnings calls and accept a loss in profits while still making millions rather than do some knee jerk layoffs that may save their profit margins in the very short term but tank the economy and their business in the medium-long term?
Because in order for companies to make "good money", employee wages would also have to go down to pre-COVID levels. And - despite what grifters may say, wages have been rising faster than prices - real wages (aka wages with inflation counted in) have increased since 2019.
If we stay away from magical thinking where a 40% deflation happens tomorrow and take into account that it would happen over years, then the reason you wouldn't buy things is because tomorrow they will be cheaper and the next day cheaper still. While your debts rise at giant speeds and the economy tanks.
Ahh ok so basically it all just comes down to corporate greed determining how much we should all suffer and be punished
Yes. That's also what inflation is. With a fiat currency, the amount of little paper slips in the world shouldn't make them any less valuable, since they're worthless to begin with except for the faith we have in them.
If the mint had a top-secret extra basement with a 1000 off-the-books printing machines going 24/7, and none of the corpos knew about it, prices wouldn't budge even 1%. As soon as some CEO found out, though, prices would jump even if that money was just sitting in a pile without going anywhere.
since they're worthless to begin with except for the faith we have in them.
That doesn't change the mechanics of supply and demand.
As soon as some CEO found out, though, prices would jump even if that money was just sitting in a pile without going anywhere.
If I, a non-CEO, found out the government was, by all appearances, getting ready to blow the money supply wide open I'd expect big changes in prices too.
My point is, it's not a law of the universe. It requires specifically rich people to know about it before any effects happen at all. It's literally Schroedinger's Inflation. Until someone with power observes the state of the money supply, nothing at all changes.
I still don't have any more money than I did before I saw the hidden money pile, dipshit. Only rich people can just start buying willy-nilly on a tip, which is my fuckin' point.
Well, never thought my calling for an end to unregulated capitalism would be misread as excusing unregulated capitalism. This is why I don't like the term "corporate greed" because it inherently separates our failed economic system of capitalism from the behavior that in encourages.
Like it or not, currently big business is legally obligated to their shareholders to generate as much profit as possible. I do not believe greed is moral, but recognize that it is not a moral choice when the law forces a decision on a person or entity. I don't want my taxes to fund the war in Iran, but they do - I do not think that is my moral failing. It is, however, my country's failure to understand the issues, be engaged in civic society, and approach issues with nuance and subtlety.
To be clear, I am on your side and think we should tax billionaires and corporations. I just think the blame / target should be the system that allows or encourages this type of behavior, more than the people who do what is expected and instructed of them. (Of course this is not hard and fast either, lobbyists definitely push for favorable regulation for profit. Again a product of unregulated capitalism)
I get you man. Youre speaking more to the failure of the system. I got you. Sounds like we're on the same side from diff angles and I'm ok with that completely. 💪💪
i think you find relatively few serious people who advocate for the second thing you say over the first.
the propaganda that works against the interests of the working class are the ones pushing that "the Left" want the latter instead of the former, and that lie is what pushes the most economically vulnerable to vote against their own interests when it comes to electing a government that will operate in the best interest of the citizenry, instead of the ones at the top profiting off of the system.
Deflation itself is the issue. Think about the psychology behind it. Why buy an appliance for $500 today when next month it may be $450? When the public anticipates that prices will keep going down it creates a death spiral where consumers withhold their spending and business make less sales and can't lower prices to attract more sales.
Sales are the lifeblood of employment. If you can't make payroll you've got to let people go which only further reduces overall spending in the broader economy. This is what the Great Depression was.
If that were true then people would only buy things during black Friday. It also doesn't account for the majority of spending which is based on need. You need water, food, shelter, transportation, and a way to communicate.
This isn't it a guess. It's economics. We already see people wait for Black Friday to purchase pricey items. They also expect prices to go back to normal after the sale. Now imagine if it's Black Friday every Friday and the prices are better than the week before. A temporary sale doesn't cause severe disruptions. Consistent declines in prices do.
You effectively turn cash into its own investment by just holding it.
I get your concerns, but i just heard "This is a USA problem more than a Europe problem, from the workers perspective", and will sleep soundly again tonight.
Yes. Owners make money just by having money, so they aren’t incentivized to spend money. Since they don’t need to spend money to make money they decide it’s too risky spend (why put money back into my business to try to eek out a margin that I might not even realize if I can coast on whatever I have stockpiled until I’m literally out of supplies and can buy everything cheaper later on or buy the same amount of supplies that I need and have more money that’s passively making money later?). Now that I’m not producing as much I don’t need as much labor, I’m going to lay off employees. When this goes on long enough deflation accelerates and I’m even more incentivized to slow production and lay off employees. It’s a positive feedback cycle where the more deflation increases the faster it accelerates and so the more companies are incentivized to lay everyone off and coast.
Put simply. If your money might be worth more tomorrow, then maybe you will do your best to put off buying that thing you need. If money is going to be worth less tomorrow, better buy now even if not absolutely necessary.
Prices drop for only one reason: people can no longer afford to buy the products.
The underlying reason can vary (war, crop failures, rising oil prices, etc.).
When a specific group of people can no longer afford to buy products, the producer will lower prices in order to make sales.
The cost of the plant, raw materials and/or energy remains the same—or may even rise—so the only area where the producer has some control is staffing; consequently, non-essential roles are eliminated.
As a result, those people can no longer buy products either, and the cycle repeats.
That is how you end up in a negative deflationary spiral.
What socialists and unions call "corporate greed" is really just the essence of a business: making a profit.
If a company with 20,000 employees lays off 1,000 of them, it is terrible for those 1,000 people; but if they don't lay those 1,000 off and the company goes bankrupt, it is disastrous for all 20,000 employees—including the original 1,000.
Usually, socialists and unions get angry because the profit isn't distributed among the employees.
But when the company is running at a loss, or needs to fund investments, research, or fine payments, do the unions or socialists ask all the employees to chip in?
That profit needs to be set aside for those very things.
What frustrates me the most is that everyone actually knows this, yet they refuse to admit it.
The attempt at maintaining mass profits results in massive layoffs which leave many jobless, and with enough panic results in mass withdrawals from banks (the beginning of the end to any financial crash) and a decline in consumation.
Combined with the governments attempts to pay off companies sudden losses in order to help keep them running as before (using tax payers money).
Then futher decline in stock prices (if they haven't already by now), deflaction, before eventually the crash.
Because businesses only understand perpetual growth and the entire system is built on the lie that there is infinite growth potential.
Businesses will lay a ton of people off in the short term to try to keep appearances of growth. If the train ever slips backwards it’s going to nuke a ton of retirement accounts, home values, etc.
You can argue that the entire system is moronic but it won’t change the reaction of businesses to potential backslide to “their most profitable year ever.” All that matters is how the investors perceive the value of the company. If that perception is tainted the entire company can cease functioning.
corporate greed. That’s it. Prices go up, so wages should go up/ jobs increase, and people can purchase the same amount if wages increase together. but they don’t. People get laid off. Profits go up.
Prices go down? People can buy more things w the same money they made right?, but they don’t. People get laid off and wages go down. Profit stays the same. It’s a win/lose situation and guess which side most of us are on?
You asked what if prices returned to pre-covid levels. The primary problem is not about the current price level. It’s about the slowing of money moving throughout the economy. Money slows, when people are incentivized not to spend it.
The S&P 500’s profit margin increased from 11.0% in 2019 to 12.9% in 2025, ~17% rise.
In a deflationary environment, corporations would see this margin decrease, while also laying off employees. They layoff employees, because it’s not profitable to keep them employed due to decreased demand and/or decreased margins.
The longer explanation is that all major public businesses rely on the price of their stock going up constantly. They need to constantly make a profit each quarter to impress the people with the big money. They bend the law, lobby in congress, and use aggressive or cutthroat business tactics to dominate markets, exploit workers, and mislead customers. All to impress the shareholders.
I’m no economist or expert in the ways of governments, but the system itself is clearly fundamentally flawed. We can’t just make simple changes or put laws into place to fix things up. No democrat or republican politician would have the brains, the desire, or the ability to change the system that dramatically. The population seems to be comfortable with the way things are as well.
In my opinion, we need some horrible shit to happen before there’s a huge change in how people think. I don’t think society will entirely collapse, or humanity will entirely die out. But it won’t be pretty. I just know that we can’t keep going on without really changing things.
Because priced aren't tied to wages as you pointed out they are tied to proofs and proof must be maximize in order to keep stock holders happy. So you are invested in lets sale Walmart all of sudden Walmart proofs drop by 25 percent you see this as business failing so you sell you stock others start a massive stock sale off driving down the shares now every manager is wondering what to do in every store. They actually have more customers now that things are cheaper but they are operating at a monthly loss that increase in some customers can make up at all if the prices of 1000 items drop 25 cents it does seem much at all its just 2500 dollars to the billion they make a year that is nothing at all. You are right by what you for get is that is for only one item sold those 1000 items sale 1000 times a day globally easly so now they are losing 2.5 m dollars a day. The get maybe 1000 new customers but they cant make up for the loss because like you said they don't have extra money so they aren't spending more they just shifted where they spend it. No company can sustain losing 10's of millions of dollars a month the first thing they do is lay off because labor cost is one of the only factor a company can control so people are always the first to go when prices drop. Look what happens every time the price oil drops to certain level 10 of k of pipeline workers are laid off you can see this pattern repeated dozens of times over the last 20 years. What maybe good for an individual isn't always good for a nation.
the us economy is not profits driven, it's growth driven. If prices are forced to drop, you can't maintain growth. If you can't maintain growth, the stock price drops, if the stock price drops, corps panic and need to reduce cost. Easiest cost to reduce is human capital in most cases. If people lose their jobs, they can't buy things. If people can't buy things, prices have to drop until they will. Go back to the start and read it again and again and again until everyone is eating dirt.
If the prices were to just drop over night to some lower level, that wouldn't be a big problem.
The problem is that deflation (and inflation) tends to stay around. I'm not an economist so I only now that historically it has been hard to break out of.
You can think of a situation where everything gets constantly cheaper for a couple of years. People start to delay buying anything, because they know it'll be cheaper in the future. This leads to fewer purchases, which leads to fewer jobs, which leads fewer purchases and so fort.
This is REAL median wages, which means that it's inflation adjusted, as you can see during COVID it did skyrocket, but also it's continued to increase, so people's earnings are going up even when adjusted for inflation.
The economy wasn’t exactly working great before. This has been a brewing for some time now…say since Reagan/Nixon/end of the gold standard quick fix that never got readdressed when that bandaid was put on because it worked out great for a select amount of the population (corporations). I have no idea when the crash will come or exactly what it will look like…but it won’t be pretty
There absolutely was wage inflation in the wake of covid.
Companies don't fire sale first when hard times hit. They reduce costs first, so by the time prices are dropping many people have no income.
And yes, it becomes a negative feedback loop aggravated not just by job and income losses, but also by the fact that once people expect job losses even people who havent lost their job yet will try to spend less, and when prices are expected to drop, everyone tries to delay buying things in hope the price will drop before they have to buy.
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u/Gentle_Snail 7h ago edited 7h ago
Deflation can also result in a very negative feedback loop, the Great Depression was a deflation spiral for example.