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All of these “technical” measures are the work of people trying to explain and come up with clever ways to argue for their jobs and continuous involvement in mo

by whb07 5y ago

All of these “technical” measures are the work of people trying to explain and come up with clever ways to argue for their jobs and continuous involvement in monetary experiments. I want deflation to occur. There are enormous sectors where deflation is seen and everyone sees the obvious benefits[0]. But when it runs up against the work of the state printing money to finance the destruction of society, then deflation is seen as dangerous. The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” This is clearly false as the wants/needs are a “now” problem, and the PhDs at the FED have never seen the lines for Black Friday to purchase TVs and other consumer electronics. Why buy an iPhone 12 when in 2 years that same iPhone will be 50% off? Not only that, there is also an increase in sales by volume which could lead to more profits by lowering the price of a widget. There are huge segments of consumers that would consume at a lower price point! [0] Electronics/computing is an extremely obvious sign of deflation. Prices lowered, or goods improved and everyone benefits.

lg 5y ago
deflation is a tax on borrowing which discourages growth, causing more deflation ad nauseam.
- bngybmgrglflps 5y ago
  Not ad nauseam. There's a floor, an equilibrium where countercyclical forces take over. (Besides: many people agreeing with this sentiment maintain that growth _per se_ is already an existential threat to human existence.) Inflation is a tax on saving which encourages malinvestment "bubbles" that fail catastrophically. Monetary policy addresses them by creating ever more money to encourage ever more synthetic growth. Once debt service threatens to consume the sovereign budget, monetary tightening ceases to be politically viable. Not for nothing, we appear to be living in the Keynesian "long run."
- whb07 5y ago
  There’s massive deflation in consumer electronics and anything related to software and we’re seeing more consumption not less. “Hey Joe, I know you like that $1000 machine, but are you willing to buy a better one for $500?” “Gee, no thanks!”
ericmay 5y ago
> The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” I'm not sure if I have seen that argument very often. It's not a great one, for sure, because at some point prices kind of just stabilize long enough for people to decide it's time to make a purchase. So sure maybe that happens in the short term, but not the long term. The inverse is true too - people are rushing out to buy cars and things anticipating the prices will continue to go up. The strongest argument I've seen against strict deflation just comes down to competitiveness of exports.
imtringued 5y ago
>I want deflation to occur. There are enormous sectors where deflation is seen and everyone sees the obvious benefits[0]. But when it runs up against the work of the state printing money to finance the destruction of society, then deflation is seen as dangerous. Greece has deflation and Japan is very close to deflation. Are those countries examples to look up to? I don't think so. >The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” The argument in favor of inflation is that future incomes are greater than past incomes, therefore inflation is a tax on old money and helps new people enter into the economy and encourage them to keep working. The other factor is that inflation is like a bluing dye used in machining. It shows the high spots that you have to scrape off to get a flat surface. It can therefore be used to reallocate limited resources to more productive sectors of the economy. Inflation is an incentive to invest your money, as otherwise it would sit in your bank account and do nothing except cause unemployment, which causes the productivity of the country to go down. “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” We have reached a point where billionaires (and companies) have more money than they could possibly spend in a lifetime. One billionaire doing nothing with his money is equivalent to a million poor people ($1000 in their bank account) not doing something with their money. As inflation is a percentage it affects people proportional to their savings, billionaires lose the most and are forced to invest their money for the benefit of the rest of the economy. Meanwhile poor people lose the least, because they don't have that many savings to begin with and the loss that they experience would be more than recovered by finding a better paying job or by finding a job at all. >[0] Electronics/computing is an extremely obvious sign of deflation. Prices lowered, or goods improved and everyone benefits. With inflation incomes go up and prices stay roughly the same. Therefore you benefit from productivity growth but not by hoarding old money earned hundreds of years ago. Meanwhile deflation works exactly the opposite way. The richer you are, the more you benefit from deflation. The earlier you have earned your money, the better.
- bko 5y ago
  > Greece has deflation and Japan is very close to deflation. Are those countries examples to look up to? I don't think so. As though the defining characteristic of those two countries is near deflation. Under the veil of ignorance I would choose to live in a low/deflationary country than a high inflation country. Every single time > Inflation is an incentive to invest your money, as otherwise it would sit in your bank account and do nothing except cause unemployment, which causes the productivity of the country to go down. What about those that are living paycheck to paycheck? What about those that are retired or near retirement? > As inflation is a percentage it affects people proportional to their savings, billionaires lose the most and are forced to invest their money for the benefit of the rest of the economy. According to the IMF and world bank this is wrong. Just look at countries that have high inflation. Inflation hurts the poor the most IMF: High inflation tends to lower the share of the bottom quintile and the real minimum wage -and tends to increase poverty https://openknowledge.worldbank.org/bitstream/handle/10986/18842/multi_page.pdf?sequence=1&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/1...
TheCoelacanth 5y ago
I don't want deflation for one very obvious reason: I have a mortgage and it is much larger than the amount of cash I keep on hand. Deflation is very bad for average consumers because most average consumers are in debt.

by whb07 5y ago

lg 5y ago

deflation is a tax on borrowing which discourages growth, causing more deflation ad nauseam.

bngybmgrglflps 5y ago
Not ad nauseam. There's a floor, an equilibrium where countercyclical forces take over. (Besides: many people agreeing with this sentiment maintain that growth _per se_ is already an existential threat to human existence.) Inflation is a tax on saving which encourages malinvestment "bubbles" that fail catastrophically. Monetary policy addresses them by creating ever more money to encourage ever more synthetic growth. Once debt service threatens to consume the sovereign budget, monetary tightening ceases to be politically viable. Not for nothing, we appear to be living in the Keynesian "long run."
whb07 5y ago
There’s massive deflation in consumer electronics and anything related to software and we’re seeing more consumption not less. “Hey Joe, I know you like that $1000 machine, but are you willing to buy a better one for $500?” “Gee, no thanks!”

ericmay 5y ago

> The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” I'm not sure if I have seen that argument very often. It's not a great one, for sure, because at some point prices kind of just stabilize long enough for people to decide it's time to make a purchase. So sure maybe that happens in the short term, but not the long term. The inverse is true too - people are rushing out to buy cars and things anticipating the prices will continue to go up. The strongest argument I've seen against strict deflation just comes down to competitiveness of exports.

imtringued 5y ago

>I want deflation to occur. There are enormous sectors where deflation is seen and everyone sees the obvious benefits[0]. But when it runs up against the work of the state printing money to finance the destruction of society, then deflation is seen as dangerous. Greece has deflation and Japan is very close to deflation. Are those countries examples to look up to? I don't think so. >The main argument the inflation lovers propose is, “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” The argument in favor of inflation is that future incomes are greater than past incomes, therefore inflation is a tax on old money and helps new people enter into the economy and encourage them to keep working. The other factor is that inflation is like a bluing dye used in machining. It shows the high spots that you have to scrape off to get a flat surface. It can therefore be used to reallocate limited resources to more productive sectors of the economy. Inflation is an incentive to invest your money, as otherwise it would sit in your bank account and do nothing except cause unemployment, which causes the productivity of the country to go down. “well if the prices keep going down then people won’t buy anything as they’ll just wait longer for the product to get cheaper.” We have reached a point where billionaires (and companies) have more money than they could possibly spend in a lifetime. One billionaire doing nothing with his money is equivalent to a million poor people ($1000 in their bank account) not doing something with their money. As inflation is a percentage it affects people proportional to their savings, billionaires lose the most and are forced to invest their money for the benefit of the rest of the economy. Meanwhile poor people lose the least, because they don't have that many savings to begin with and the loss that they experience would be more than recovered by finding a better paying job or by finding a job at all. >[0] Electronics/computing is an extremely obvious sign of deflation. Prices lowered, or goods improved and everyone benefits. With inflation incomes go up and prices stay roughly the same. Therefore you benefit from productivity growth but not by hoarding old money earned hundreds of years ago. Meanwhile deflation works exactly the opposite way. The richer you are, the more you benefit from deflation. The earlier you have earned your money, the better.

bko 5y ago
> Greece has deflation and Japan is very close to deflation. Are those countries examples to look up to? I don't think so. As though the defining characteristic of those two countries is near deflation. Under the veil of ignorance I would choose to live in a low/deflationary country than a high inflation country. Every single time > Inflation is an incentive to invest your money, as otherwise it would sit in your bank account and do nothing except cause unemployment, which causes the productivity of the country to go down. What about those that are living paycheck to paycheck? What about those that are retired or near retirement? > As inflation is a percentage it affects people proportional to their savings, billionaires lose the most and are forced to invest their money for the benefit of the rest of the economy. According to the IMF and world bank this is wrong. Just look at countries that have high inflation. Inflation hurts the poor the most IMF: High inflation tends to lower the share of the bottom quintile and the real minimum wage -and tends to increase poverty https://openknowledge.worldbank.org/bitstream/handle/10986/18842/multi_page.pdf?sequence=1&isAllowed=y https://openknowledge.worldbank.org/bitstream/handle/10986/1...

TheCoelacanth 5y ago

I don't want deflation for one very obvious reason: I have a mortgage and it is much larger than the amount of cash I keep on hand. Deflation is very bad for average consumers because most average consumers are in debt.