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If GDP contracts 10% this year - a real possibility - there is literally zero chance of inflation. The real enemy is deflation.
by ttul 7y ago
If GDP contracts 10% this year - a real possibility - there is literally zero chance of inflation. The real enemy is deflation.
- ma2rten 7y agoCan you explain that?
- ttul 7y agoPrices increase when there is more demand for things than there is supply. If the economy collapses by 10%, then it’s likely that people will be offering deals on products to stimulate demand. That means prices going down, not up.
- ma2rten 7y agoOkay, but as companies shut down, supply chains are disrupted and employers implement measures to enact social distancing, why wouldn't supply also go down? Does the GPD going down necessarily mean that there is less demand and not less supply?
- redwood 7y agoMassive drop in demand leads to a massive drop in pricing
- steveeq1 7y ago"literally zero chance"?!? Ok, I'm going to hold you to this. I am screenshoting it.