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Yeah, deflation is awful. Imagine our continuously increased production and efficiency resulting in goods becoming cheaper and the value of the working person’s

Yeah, deflation is awful. Imagine our continuously increased production and efficiency resulting in goods becoming cheaper and the value of the working person’s dollar going farther. Horrifying.

imtringued 5y ago
Imagine money capitalists abandoning physical capital and laying off workers because their grocery bill turns the yield on employment negative while the yield on money itself is positive. You'd be foolish to sell products for lower prices, you don't get a discount on debt for example (negative interest rates).
jokethrowaway 5y ago
With deflation there would be no reason to invest your money, paralysing the economy. Some inflation is needed; what we don't need is https://brrr.money/ https://brrr.money/
- dnautics 5y ago
  "no reason to invest your money" You mean with deflation people will suddenly no longer want for more money? Sign us up!
  - ska 5y ago
    > You mean with deflation people will suddenly no longer want for more money? Sign us up! No, they mean that people will want jobs and not find them. [addition: this is at least the orthodox view behind small inflation targets as policy, that on the whole it's the best trade off]
    - friedturkey 5y ago
      Japan is said to be deflationary (until covid at least) and lacks an unemployment problem.
      - ska 5y ago
        Is japan deflationary in real terms? Even if so I suspect the economists would argue endlessly about "other factors". Either way, I'm not saying I believe the analysis, but when economists talk about the problems of deflation they aren't afraid that people will have "enough" money.
  - imtringued 5y ago
    If there is no reason to invest they will want more money. Once the interest rate drops below liquidity preference the desire to hold money approaches infinity. This is known as the keynesian liquidity trap. The only solution is to implement negative interest rates on cash to neutralize the liquidity preference. Even if you have negative interest rates on money, people will flock to the next basic human need that has its own liquidity preference. Once the yield on land or property falls below liquidity preference people will hold onto empty property. The solution to the problem is to neutralize ground rent via land value taxation. Thus you have both a money cycle and a real estate cycle.
  - notahacker 5y ago
    People who already have lots of money will no longer want for more money. That's not so great for the people who need to borrow it, or want a job
BitwiseFool 5y ago
There's this really weird dichotomy where whats "good for the economy" is often bad for you as an individual, and vice versa.
- dnautics 5y ago
  Sure because the people who decide what is "good for the economy" have different interests than pretty much every other individual in it.
  - pashamur 5y ago
    It’s a real thing: https://en.m.wikipedia.org/wiki/Paradox_of_thrift https://en.m.wikipedia.org/wiki/Paradox_of_thrift You get ahead by saving, but everyone can’t do that all together or the economy collapses.
    - dnautics 5y ago
      It's a model that makes behavioral assumptions that are provably wrong. The fact that people buy computers despite prices going down contradicts the underlying assumption. There is nothing particularly special about computers among all goods.
    - fuzzfactor 5y ago
      Only collapse of the consumer economy, which in the first place should never be allowed to rise to enough significance to be much of a show-stopping collapse when it happens.
colinmhayes 5y ago
There will not be many working people if the economy is deflationary. Please read a macro book so you at least understand what you're arguing against before spouting nonsense.
- megablast 5y ago
  Tell so Some to read a book because you can’t articulate the issue.
- friedturkey 5y ago
  Japan says its economy has been in deflation since the 90s.[1] Everybody is working. Sure, the numbers aren't going up and there aren't constant booms of new companies being valued at 100 billion and exploding (which draws ire from economists and billionaire investors), but quality of life has been consistently high for normal people. Homelessness is barely present and people who want a job can find one quickly. If the books say it's wrong, maybe it's time they get updated. [1] https://www5.cao.go.jp/zenbun/wp-e/wp-je03/03-00102.html https://www5.cao.go.jp/zenbun/wp-e/wp-je03/03-00102.html
  - colinmhayes 5y ago
    Japan isn't a very good example because their economy has absolutely tanked because of their horrible monetary policy. Japan was in a liquidity trap caused by their low inflation for literally decades which caused their economy to grow barely 1% annually. The reason their unemployment rate is low is because they've been stuck in this rut for literally 30 years, so people have adjusted. That doesn't mean it isn't causing immense harm though. Real wages are literally lower than they were in the early 90s. https://www.economist.com/finance-and-economics/2013/03/09/waging-a-new-war https://www.economist.com/finance-and-economics/2013/03/09/w...
    - djohnston 5y ago
      Real wages for Americans also haven't grown in decades: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us... What's the harm?
batshit_beaver 5y ago
Deflation is horrific for any economy because it makes debt more expensive to service. Like it or not, modern economies are largely able to function thanks to prolific use of credit. If you think about it, it makes a ton of sense - if a rich person or company is sitting on a bunch of money, in an inflationary environment they are encouraged to invest this money in r&d, businesses (esp risky ones, like innovative startups), better employees or benefits for existing ones, etc. In a deflationary economy the best use of money is NO use of money. It's a death trap.

Yeah, deflation is awful. Imagine our continuously increased production and efficiency resulting in goods becoming cheaper and the value of the working person’s dollar going farther. Horrifying.

imtringued 5y ago

Imagine money capitalists abandoning physical capital and laying off workers because their grocery bill turns the yield on employment negative while the yield on money itself is positive. You'd be foolish to sell products for lower prices, you don't get a discount on debt for example (negative interest rates).

jokethrowaway 5y ago

With deflation there would be no reason to invest your money, paralysing the economy. Some inflation is needed; what we don't need is https://brrr.money/ https://brrr.money/

dnautics 5y ago
"no reason to invest your money" You mean with deflation people will suddenly no longer want for more money? Sign us up!
- ska 5y ago
  > You mean with deflation people will suddenly no longer want for more money? Sign us up! No, they mean that people will want jobs and not find them. [addition: this is at least the orthodox view behind small inflation targets as policy, that on the whole it's the best trade off]
  - friedturkey 5y ago
    Japan is said to be deflationary (until covid at least) and lacks an unemployment problem.
    - ska 5y ago
      Is japan deflationary in real terms? Even if so I suspect the economists would argue endlessly about "other factors". Either way, I'm not saying I believe the analysis, but when economists talk about the problems of deflation they aren't afraid that people will have "enough" money.
- imtringued 5y ago
  If there is no reason to invest they will want more money. Once the interest rate drops below liquidity preference the desire to hold money approaches infinity. This is known as the keynesian liquidity trap. The only solution is to implement negative interest rates on cash to neutralize the liquidity preference. Even if you have negative interest rates on money, people will flock to the next basic human need that has its own liquidity preference. Once the yield on land or property falls below liquidity preference people will hold onto empty property. The solution to the problem is to neutralize ground rent via land value taxation. Thus you have both a money cycle and a real estate cycle.
- notahacker 5y ago
  People who already have lots of money will no longer want for more money. That's not so great for the people who need to borrow it, or want a job

BitwiseFool 5y ago

There's this really weird dichotomy where whats "good for the economy" is often bad for you as an individual, and vice versa.

dnautics 5y ago
Sure because the people who decide what is "good for the economy" have different interests than pretty much every other individual in it.
- pashamur 5y ago
  It’s a real thing: https://en.m.wikipedia.org/wiki/Paradox_of_thrift https://en.m.wikipedia.org/wiki/Paradox_of_thrift You get ahead by saving, but everyone can’t do that all together or the economy collapses.
  - dnautics 5y ago
    It's a model that makes behavioral assumptions that are provably wrong. The fact that people buy computers despite prices going down contradicts the underlying assumption. There is nothing particularly special about computers among all goods.
  - fuzzfactor 5y ago
    Only collapse of the consumer economy, which in the first place should never be allowed to rise to enough significance to be much of a show-stopping collapse when it happens.

colinmhayes 5y ago

There will not be many working people if the economy is deflationary. Please read a macro book so you at least understand what you're arguing against before spouting nonsense.

megablast 5y ago
Tell so Some to read a book because you can’t articulate the issue.
friedturkey 5y ago
Japan says its economy has been in deflation since the 90s.[1] Everybody is working. Sure, the numbers aren't going up and there aren't constant booms of new companies being valued at 100 billion and exploding (which draws ire from economists and billionaire investors), but quality of life has been consistently high for normal people. Homelessness is barely present and people who want a job can find one quickly. If the books say it's wrong, maybe it's time they get updated. [1] https://www5.cao.go.jp/zenbun/wp-e/wp-je03/03-00102.html https://www5.cao.go.jp/zenbun/wp-e/wp-je03/03-00102.html
- colinmhayes 5y ago
  Japan isn't a very good example because their economy has absolutely tanked because of their horrible monetary policy. Japan was in a liquidity trap caused by their low inflation for literally decades which caused their economy to grow barely 1% annually. The reason their unemployment rate is low is because they've been stuck in this rut for literally 30 years, so people have adjusted. That doesn't mean it isn't causing immense harm though. Real wages are literally lower than they were in the early 90s. https://www.economist.com/finance-and-economics/2013/03/09/waging-a-new-war https://www.economist.com/finance-and-economics/2013/03/09/w...
  - djohnston 5y ago
    Real wages for Americans also haven't grown in decades: https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us-workers-real-wages-have-barely-budged-for-decades/ https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us... What's the harm?

batshit_beaver 5y ago

Deflation is horrific for any economy because it makes debt more expensive to service. Like it or not, modern economies are largely able to function thanks to prolific use of credit. If you think about it, it makes a ton of sense - if a rich person or company is sitting on a bunch of money, in an inflationary environment they are encouraged to invest this money in r&d, businesses (esp risky ones, like innovative startups), better employees or benefits for existing ones, etc. In a deflationary economy the best use of money is NO use of money. It's a death trap.