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>The German Saver knows better than most that inflation destroys savings. Yeah this is not the outcome Germany or the EU needs to worry about. It's experiencin

>The German Saver knows better than most that inflation destroys savings. Yeah this is not the outcome Germany or the EU needs to worry about. It's experiencing Japanese deflation for 20 years. >This is a looming political issue that's only just beginning. Yes there's been plenty of hard money cranks that have said this for 10 years since the Great Financial Crisis in the US. Zero Hedge, gold bugs, hedge fund managers, etc have all been sounding the alarm about "money printing" and the deficit. There's no inflation in sight.

deleted 7y ago
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yorwba 7y ago
> It's experiencing Japanese deflation for 20 years. GDP per capita (PPP) in Japan has more than doubled over the past 30 years. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=JP&view=chart https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locat... Slow growth is only a problem if you rely on investing to generate your income. Otherwise, even no growth at all is fine.
- AWildC182 7y ago
  Have there been any major issues with declining QOL in Japan? It might be a cultural barrier but aside from the deflation stories making the rounds, I don't hear much about them suffering because of it.
  - raxxorrax 7y ago
    They probably don't and economic analysts are probably just bad or lying.
samsonradu 7y ago
Japanese deflation is brought up a lot. However it didn’t really strike me as a troubled economy when visiting - on the contrary, things looked quite well. Can someone elaborate on why deflation is so bad?
- toss1 7y ago
  Deflation is bad because it is a self-reinforcing slowdown in the economy. The money gets more valuable and the assets get cheaper. so the incentive in every micro-decision is to hoard money and not spend. Why spend when the same thing will get cheaper tomorrow/next week/month/year...? So, the key factor of the Velocity of Money declines, and the entire economy either grinds or crashes to a (relative) halt. My understanding is that deflation is also very hard to get out of. Requires massive liquidity injections, and doing that without creating a crisis of confidence by overshooting is tough. For the current situation, my working conjecture (w/o running hard numbers/models) is that the Great Recession 11yrs ago destroyed so much wealth/value, and was so deflationary, that the central banks may never soon fill the hole with new liquidity. The evidence is that despite nearly continuous quantitative easing and other CB programs, over a decade later, we're still seeing this kind of phenomena - they just can't create & maintain even minimal inflation. Not sure what to do about it, but that's what I see... (edit: typos)
  - chii 7y ago
    Deflationary problems seems to me a overblown issue, and the cure may be worse than the disease. Inflation prevents low income earners from saving, but they aren't in a position to take risk and invest. Therefore, it causes their networth to drop in relation to the wealthy (who can take risks to keep up by investing). Inflation also keep wages down, as it's easier to pay the same wage , and any increase must be above inflation rate to remain at the same purchasing power. Inflation also leads to speculation, rather than to invest in productivity increases. With deflation, you end up not spending as much on discretionary/luxury goods, and only spend the minimum necessary. The prevailing theory is that this leads to slowdown in the economy - but I say it leads to low to zero mal-investments. If you have a high chance that your capital is going to have more purchasing power later, you would only invest in good, known ventures that is not speculative (e.g., building basic infrastructure that has a sound business model, rather than building fad apps).
    - kyuudou 7y ago
      EXCELLENT synopsis. Also, some consider inflation outright theft from the middle and lower classes or in the least morally questionable.
llcoolv 7y ago
There is no inflation? You haven't seen the insanely skyrocketing property prices in pretty much every major EU city? And because rent/mortgage took the lion's share in increased cost in other products it manifested as shrinkflation - https://en.wikipedia.org/wiki/Shrinkflation https://en.wikipedia.org/wiki/Shrinkflation.
raxxorrax 7y ago
The Japan is failing meme is astonishing. It might have some slight demographic problems, but the solution of increasing the workforce without limits is more a failure of economic analysts than the economy of Japan. Many countries would kill to have these problems, which might just be completely irrelevant. The numbers from Japan look pretty good. Deflation isn't inherently good, inflation isn't inherently good. Most popular economic indicators are probably trash.

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yorwba 7y ago

> It's experiencing Japanese deflation for 20 years. GDP per capita (PPP) in Japan has more than doubled over the past 30 years. https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locations=JP&view=chart https://data.worldbank.org/indicator/NY.GDP.PCAP.PP.CD?locat... Slow growth is only a problem if you rely on investing to generate your income. Otherwise, even no growth at all is fine.

AWildC182 7y ago
Have there been any major issues with declining QOL in Japan? It might be a cultural barrier but aside from the deflation stories making the rounds, I don't hear much about them suffering because of it.
- raxxorrax 7y ago
  They probably don't and economic analysts are probably just bad or lying.

samsonradu 7y ago

Japanese deflation is brought up a lot. However it didn’t really strike me as a troubled economy when visiting - on the contrary, things looked quite well. Can someone elaborate on why deflation is so bad?

toss1 7y ago
Deflation is bad because it is a self-reinforcing slowdown in the economy. The money gets more valuable and the assets get cheaper. so the incentive in every micro-decision is to hoard money and not spend. Why spend when the same thing will get cheaper tomorrow/next week/month/year...? So, the key factor of the Velocity of Money declines, and the entire economy either grinds or crashes to a (relative) halt. My understanding is that deflation is also very hard to get out of. Requires massive liquidity injections, and doing that without creating a crisis of confidence by overshooting is tough. For the current situation, my working conjecture (w/o running hard numbers/models) is that the Great Recession 11yrs ago destroyed so much wealth/value, and was so deflationary, that the central banks may never soon fill the hole with new liquidity. The evidence is that despite nearly continuous quantitative easing and other CB programs, over a decade later, we're still seeing this kind of phenomena - they just can't create & maintain even minimal inflation. Not sure what to do about it, but that's what I see... (edit: typos)
- chii 7y ago
  Deflationary problems seems to me a overblown issue, and the cure may be worse than the disease. Inflation prevents low income earners from saving, but they aren't in a position to take risk and invest. Therefore, it causes their networth to drop in relation to the wealthy (who can take risks to keep up by investing). Inflation also keep wages down, as it's easier to pay the same wage , and any increase must be above inflation rate to remain at the same purchasing power. Inflation also leads to speculation, rather than to invest in productivity increases. With deflation, you end up not spending as much on discretionary/luxury goods, and only spend the minimum necessary. The prevailing theory is that this leads to slowdown in the economy - but I say it leads to low to zero mal-investments. If you have a high chance that your capital is going to have more purchasing power later, you would only invest in good, known ventures that is not speculative (e.g., building basic infrastructure that has a sound business model, rather than building fad apps).
  - kyuudou 7y ago
    EXCELLENT synopsis. Also, some consider inflation outright theft from the middle and lower classes or in the least morally questionable.

llcoolv 7y ago

There is no inflation? You haven't seen the insanely skyrocketing property prices in pretty much every major EU city? And because rent/mortgage took the lion's share in increased cost in other products it manifested as shrinkflation - https://en.wikipedia.org/wiki/Shrinkflation https://en.wikipedia.org/wiki/Shrinkflation.

raxxorrax 7y ago

The Japan is failing meme is astonishing. It might have some slight demographic problems, but the solution of increasing the workforce without limits is more a failure of economic analysts than the economy of Japan. Many countries would kill to have these problems, which might just be completely irrelevant. The numbers from Japan look pretty good. Deflation isn't inherently good, inflation isn't inherently good. Most popular economic indicators are probably trash.