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>Specifically in this case wage deflation. How? How is this specifically wage deflation? That's a hell of a quantum leap. If anything, wages are much more r

>Specifically in this case wage deflation. How? How is this specifically wage deflation? That's a hell of a quantum leap. If anything, wages are much more resistant to downward pressure than goods. (People really don't like getting a paycut.) So even if the value of dollars increase, most people keep the same wage. In extreme cases, in can even end up in layoff, because people are now paid too much in comparison of everything else in the market. I would take deflation over inflation any day. Inflation eats away anything you try to keep for a rainy day, while at the same time reducing the value of your paycheck. This means that you must constantly negotiate (or beg, depending on your position) for a raise or you fall behind.

AnthonyMouse 11y ago
> How is this specifically wage deflation? You're asking how hoarding cash instead of paying higher wages causes wage deflation? > If anything, wages are much more resistant to downward pressure than goods. Wage deflation relative to CPI. Wages remain stagnant or increase less than prices. We would have overall deflation if The Fed wasn't printing money to offset the corporate hoarding. Which is almost certainly better than overall deflation but is still quite bad for people who are paying more for things but not getting paid more. > I would take deflation over inflation any day. Deflation was a primary cause of the Great Depression. Deflation is very bad. > Inflation eats away anything you try to keep for a rainy day, while at the same time reducing the value of your paycheck. Inflation doesn't eat the value of stuff. If you own a home or stocks then inflation causes their value to increase proportionally. The problem is when there is price inflation without wage inflation. Which is caused by corporations hoarding cash instead of paying higher wages.
- Frozenlock 11y ago
  > You're asking how hoarding cash instead of paying higher wages causes wage deflation? No, I'm asking how deflation in general causes wage deflation. Your post was in answer to deflation caused by hiding/destroying cash. > Wage deflation relative to CPI. Wages remain stagnant or increase less than prices. So it's not related to the increase of value in the currency caused by hiding away 1 billion under a mattress. You used the same term but for different context/meaning. The weird thing is how you phrased it as if it was a causal relationship. > Deflation was a primary cause of the Great Depression. Deflation is very bad. There's many factors for the US Great Depression (such as previous inflation). There's also the relative speed at which those things occur. Both can be destabilizing in high enough magnitude. But deflation is the natural result of a growing economy and better efficiency. If it was bad, civilisations would have self-destructed every time they came up with a better way to do things. Imagine a new technique that would reduce food prices by 50%. Would this be a good, or a bad thing? > inflation doesn't eat the value of stuff. If you own a home or stocks then inflation causes their value to increase proportionally. Sure, I never said to the contrary. What's your point? People should stop saving money and buy everything around them instead? There's a huge cost to that, especially in real estate.
  - AnthonyMouse 11y ago
    > No, I'm asking how deflation in general causes wage deflation. Your post was in answer to deflation caused by hiding/destroying cash. Deflation most affects the party who would otherwise have first received the money that was removed from the economy. > But deflation is the natural result of a growing economy and better efficiency. If it was bad, civilisations would have self-destructed every time they came up with a better way to do things. Imagine a new technique that would reduce food prices by 50%. Would this be a good, or a bad thing? Costs are different than prices. Reducing the cost of producing food is good. Reducing prices is generally bad -- it's better to increase the price of everything else by creating new money and leave the price of food constant. Because reducing prices creates an incentive to hoard currency, which is very bad for the economy. It makes currency an investment that competes with actually productive investments and reduces the speed of money which reduces economic activity. > People should stop saving money and buy everything around them instead? That's already what people do. Who literally hoards cash?
- ArkyBeagle 11y ago
  It's pretty difficult to say there is actual price inflation these days. Most central banks target 2% and don't make that.
- mindslight 11y ago
  >> Inflation eats away anything you try to keep for a rainy day, while at the same time reducing the value of your paycheck. > Inflation doesn't eat the value of stuff. If you own a home or stocks then inflation causes their value to increase proportionally. The paper-value of one's home does not matter. Everybody needs a place to live - the next liquidity event will be after they die. You're advocating the fallacy behind the continual housing bubble (and all these renovations people do for personal comfort but lie to themselves about it being financially beneficial, but I digress). Stocks are one of the least-worst places to park savings. Which forms a bubble of dumb money "investing" in things it knows nothing about, but simply following the herd to safety (and then following it out). Savings are what gives individuals power and autonomy. Debt creates an obligation which must be continually serviced. If one is reliant on their income, they lose the power to walk away from their job. The only bit of flexibility they have is to play different masters off one another, but given what's at stake the employers certainly know this game and compete as little as possible. Analyze your own position. Calculate out how many months per year you have to work for previously-rare survival goods of food/clothes/electricity, versus how many simply go to paying (a bank) rent on housing/etc. Then look into how much it would actually cost to build a dwelling, versus how much of that cost is solely due to being financialized. Running from the bogeyman of deflation, we've basically recreated indentured servitude for the modern day! It's no wonder the middle class is fading - when your personal autonomy is the difference between two large numbers, the only answers are go big or go home.
  - AnthonyMouse 11y ago
    Housing prices aren't what they are because of inflation. They are what they are because of restrictions on creating more housing units. If there was more housing on the market then the price would go down and people would spend less of their money on housing. Urban housing prices have increased faster than overall inflation simply because we're not building enough of it.
    - mindslight 11y ago
      Where does the demand-side elasticity come from? Unless the decades-in-the-making housing bubble actually pops, housing will always be a sellers' market. If the monthly cost of housing actually started tending towards the amortized cost of construction, the builders would immediately stop just as they did during the last mini-crisis. This idea that the "value" of housing should be continually skyrocketing is baked in our national religion! It's the monetary policy that creates ever-more rope for people to hang themselves with. The debt<->collateral relationship is circular - every cut to interest rates / down payments directly increases the capital value by the corresponding amount. This has destroyed the idea of ownership, making it impossible to permanently get ahead of the treadmill. (IMHO this economic weather is directly tied to the centralizing trend of communications technology growing the asymmetry of power that is ever-better at siphoning surplus away from individuals. Giving individuals the power to repudiate a mortgage while avoiding eviction would also correct prices)

AnthonyMouse 11y ago

> How is this specifically wage deflation? You're asking how hoarding cash instead of paying higher wages causes wage deflation? > If anything, wages are much more resistant to downward pressure than goods. Wage deflation relative to CPI. Wages remain stagnant or increase less than prices. We would have overall deflation if The Fed wasn't printing money to offset the corporate hoarding. Which is almost certainly better than overall deflation but is still quite bad for people who are paying more for things but not getting paid more. > I would take deflation over inflation any day. Deflation was a primary cause of the Great Depression. Deflation is very bad. > Inflation eats away anything you try to keep for a rainy day, while at the same time reducing the value of your paycheck. Inflation doesn't eat the value of stuff. If you own a home or stocks then inflation causes their value to increase proportionally. The problem is when there is price inflation without wage inflation. Which is caused by corporations hoarding cash instead of paying higher wages.

Frozenlock 11y ago
> You're asking how hoarding cash instead of paying higher wages causes wage deflation? No, I'm asking how deflation in general causes wage deflation. Your post was in answer to deflation caused by hiding/destroying cash. > Wage deflation relative to CPI. Wages remain stagnant or increase less than prices. So it's not related to the increase of value in the currency caused by hiding away 1 billion under a mattress. You used the same term but for different context/meaning. The weird thing is how you phrased it as if it was a causal relationship. > Deflation was a primary cause of the Great Depression. Deflation is very bad. There's many factors for the US Great Depression (such as previous inflation). There's also the relative speed at which those things occur. Both can be destabilizing in high enough magnitude. But deflation is the natural result of a growing economy and better efficiency. If it was bad, civilisations would have self-destructed every time they came up with a better way to do things. Imagine a new technique that would reduce food prices by 50%. Would this be a good, or a bad thing? > inflation doesn't eat the value of stuff. If you own a home or stocks then inflation causes their value to increase proportionally. Sure, I never said to the contrary. What's your point? People should stop saving money and buy everything around them instead? There's a huge cost to that, especially in real estate.
- AnthonyMouse 11y ago
  > No, I'm asking how deflation in general causes wage deflation. Your post was in answer to deflation caused by hiding/destroying cash. Deflation most affects the party who would otherwise have first received the money that was removed from the economy. > But deflation is the natural result of a growing economy and better efficiency. If it was bad, civilisations would have self-destructed every time they came up with a better way to do things. Imagine a new technique that would reduce food prices by 50%. Would this be a good, or a bad thing? Costs are different than prices. Reducing the cost of producing food is good. Reducing prices is generally bad -- it's better to increase the price of everything else by creating new money and leave the price of food constant. Because reducing prices creates an incentive to hoard currency, which is very bad for the economy. It makes currency an investment that competes with actually productive investments and reduces the speed of money which reduces economic activity. > People should stop saving money and buy everything around them instead? That's already what people do. Who literally hoards cash?
ArkyBeagle 11y ago
It's pretty difficult to say there is actual price inflation these days. Most central banks target 2% and don't make that.
mindslight 11y ago
>> Inflation eats away anything you try to keep for a rainy day, while at the same time reducing the value of your paycheck. > Inflation doesn't eat the value of stuff. If you own a home or stocks then inflation causes their value to increase proportionally. The paper-value of one's home does not matter. Everybody needs a place to live - the next liquidity event will be after they die. You're advocating the fallacy behind the continual housing bubble (and all these renovations people do for personal comfort but lie to themselves about it being financially beneficial, but I digress). Stocks are one of the least-worst places to park savings. Which forms a bubble of dumb money "investing" in things it knows nothing about, but simply following the herd to safety (and then following it out). Savings are what gives individuals power and autonomy. Debt creates an obligation which must be continually serviced. If one is reliant on their income, they lose the power to walk away from their job. The only bit of flexibility they have is to play different masters off one another, but given what's at stake the employers certainly know this game and compete as little as possible. Analyze your own position. Calculate out how many months per year you have to work for previously-rare survival goods of food/clothes/electricity, versus how many simply go to paying (a bank) rent on housing/etc. Then look into how much it would actually cost to build a dwelling, versus how much of that cost is solely due to being financialized. Running from the bogeyman of deflation, we've basically recreated indentured servitude for the modern day! It's no wonder the middle class is fading - when your personal autonomy is the difference between two large numbers, the only answers are go big or go home.
- AnthonyMouse 11y ago
  Housing prices aren't what they are because of inflation. They are what they are because of restrictions on creating more housing units. If there was more housing on the market then the price would go down and people would spend less of their money on housing. Urban housing prices have increased faster than overall inflation simply because we're not building enough of it.
  - mindslight 11y ago
    Where does the demand-side elasticity come from? Unless the decades-in-the-making housing bubble actually pops, housing will always be a sellers' market. If the monthly cost of housing actually started tending towards the amortized cost of construction, the builders would immediately stop just as they did during the last mini-crisis. This idea that the "value" of housing should be continually skyrocketing is baked in our national religion! It's the monetary policy that creates ever-more rope for people to hang themselves with. The debt<->collateral relationship is circular - every cut to interest rates / down payments directly increases the capital value by the corresponding amount. This has destroyed the idea of ownership, making it impossible to permanently get ahead of the treadmill. (IMHO this economic weather is directly tied to the centralizing trend of communications technology growing the asymmetry of power that is ever-better at siphoning surplus away from individuals. Giving individuals the power to repudiate a mortgage while avoiding eviction would also correct prices)