11 ms·

Japan had deflation and as a normal person it was great. Less people got rich off the stock market casino though

by jbm 2y ago

hartator 2y ago
Interesting. I guess things getting cheaper and cheaper can be enjoyable. What was your experience in term of doing business?
cs702 2y ago
When deflation becomes a self-reinforcing deflationary loop, as in the 1930's in the US, it's horrible: https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/blog/2023/aug/ov/ovblog_deflationaryloop.gif https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed... That's why Japan has been trying to fight deflation for decades.
- cryptonector 2y ago
  One of the key things that made the 30s so horrible was that Hoover and Roosevelt both pressured industry to not cut wages, which they complied with, but they cut employment instead.
  - WalterBright 2y ago
    The key thing was the Fed mismanaging and misunderstanding how money worked. My dad (grew up in the 30s) said that simply "nobody had any money".
    - throw0101b 2y ago
      > The key thing was the Fed mismanaging and misunderstanding how money worked. The key thing was the Fed was (early on) complying with how the gold standard worked, which is a finite amount of cash being available, and only being able to be increased by having more of the shiny stuff. > When the Great Depression hit in 1929, the Fed’s instinct was to do little and let the economy and markets correct. But the Fed seemed to have no sense of how big the credit bubble from the 1920s was. Consequently, from 1929–1933, the Fed remained committed to a tight monetary policy. Under the gold standard then in force, when the gold balances held by the government contracted, the money supply did so as well. Faced with the increasing economic turmoil, US businesses and the public at large trusted gold more than paper currency. Overseas investors, fearing a potential devaluation of the dollar, preferred gold too. This created a gold drain. As the Fed’s gold stocks declined, the United States unwittingly reduced credit in the economy. Over the 1929–1933 period, the US money supply contracted sharply, declining by roughly one third between 1929 and 1933, and the country experienced its worst ever downturn, with unemployment soaring to roughly 25%. * https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost-of-1937-the-fed-stalls-on-rate-hike/ https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost... This is one of the reason why the gold standard (or any "hard" currency) is a bad idea: * https://www.moneyandbanking.com/commentary/2016/12/14/why-a-gold-standard-is-a-very-bad-idea https://www.moneyandbanking.com/commentary/2016/12/14/why-a-... The sooner the US (and other countries) got off the gold standard, the sooner their economies started to recover: > In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%. * https://delong.typepad.com/delong_long_form/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html https://delong.typepad.com/delong_long_form/2013/10/the-grea... There was a misstep in 1936 when there was pressure to raise rates and also to reduce spending due to deficits, and so rates were raised and austerity was enacted… and the economy tanked again.
    - ramesh31 2y ago
      >My dad (grew up in the 30s) said that simply "nobody had any money". People hear this and think "everyone was broke", but there literally was just no money. We hadn't fully figured out modern monetary policy at that point, and the old ideas of austerity reigned supreme for policymakers.
      - WalterBright 2y ago
        Your clarification is accurate.
      - OscarCunningham 2y ago
        I remember thinking about this when my dad lost his job after the 2008 crash. He worked on machines that made computer chips. People still wanted computer chips. And yet there was no means to connect the two.
      - cryptonector 2y ago
        > the old ideas of austerity reigned supreme for policymakers. And yet, no. No one spoke of austerity. The government wasn't austere. Hoover's Treasury Sec., Andrew Mellon, wanted to "liquidate, liquidate, liquidate" in 1929, but that didn't happen. More government largesse than Roosevelt went with would not have resolved things, not all other things being equal.
    - cryptonector 2y ago
      I think there were a lot of problems, but most of them boil down to "heavy-handed government intervention in the markets". That includes pressure to keep wages high and mismanagement at the Fed.
      - throw0101b 2y ago
        > I think there were a lot of problems, but most of them boil down to "heavy-handed government intervention in the markets". The Fed was very hands off in the early 1930s: > […] At the onset of the Great Depression in 1929–1930, the Fed maintained a “hands-off” approach, believing the economy simply needed to “wring out its excesses.” This is somewhat ironic in that Fed policy itself greatly contributed to the financial excesses of the 1920s. Nevertheless, the Fed failed to recognize the nature of the economy. > When the Great Depression hit in 1929, the Fed’s instinct was to do little and let the economy and markets correct. But the Fed seemed to have no sense of how big the credit bubble from the 1920s was. Consequently, from 1929–1933, the Fed remained committed to a tight monetary policy. Under the gold standard then in force, when the gold balances held by the government contracted, the money supply did so as well. Faced with the increasing economic turmoil, US businesses and the public at large trusted gold more than paper currency. Overseas investors, fearing a potential devaluation of the dollar, preferred gold too. This created a gold drain. As the Fed’s gold stocks declined, the United States unwittingly reduced credit in the economy. Over the 1929–1933 period, the US money supply contracted sharply, declining by roughly one third between 1929 and 1933, and the country experienced its worst ever downturn, with unemployment soaring to roughly 25%. * https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost-of-1937-the-fed-stalls-on-rate-hike/ https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost... It was the interventionist policies of new New Deal and its various spending and jobs programs that helped the recovery begin. As well as getting off the gold standard: * https://delong.typepad.com/delong_long_form/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html https://delong.typepad.com/delong_long_form/2013/10/the-grea... If you think things are bad with government intervention and regulation, you may wish to examine history about things before it became a thing: * https://en.wikipedia.org/wiki/Panic_of_1893 https://en.wikipedia.org/wiki/Panic_of_1893 * https://en.wikipedia.org/wiki/Panic_of_1896 https://en.wikipedia.org/wiki/Panic_of_1896 * https://en.wikipedia.org/wiki/Panic_of_1907 https://en.wikipedia.org/wiki/Panic_of_1907 IMHO the (US) financial system has been much more stable with more of a government / Fed hands-on approach. Certainly there were crashes (1987) and bubbles (1999), but that was more on the private sector side. At least one problem was due to not enough oversight: * https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis
  - deleted 2y ago
    [deleted]
  - imtringued 2y ago
    Cutting wages never works because you need to cut the wages according to the marginal utility of a dollar and cut the wages where the utility per dollar is lowest. Now here is a rhetorical question, who exactly do you think has the power to set wages? Obviously those with a low marginal utility of money. This means the wages of those with the highest marginal utility get cut. The money saved from the wage cuts will find its way to the capital markets, while the money spent on consumption has decreased leading to a reinforcement of the problem. This will have to continue until the person with the lowest marginal utility of money has received a wage cut, which generally happens when the company goes bankrupt.
    - cryptonector 2y ago
      Perhaps, but when the industry doesn't cut wages because the government insists on it, and instead you get high unemployment, that's not better.
    - randoglando 2y ago
      What does "marginal utility of money" mean? Is the person with the lowest "marginal utility of money" the CEO?
- WalterBright 2y ago
  There is no more a deflationary loop than an inflationary loop. Inflation/deflation happens when there is a mismatch between the supply of money and the value of goods and services in the economy. This mismatch usually happens because the central bank prints deficit money. Deflation in the 1930s happened because the Fed went the other way, refusing to create money. This continued until the late 30s when the Fed changed course, and (you guessed it) produced lots of inflation.
  - wslh 2y ago
    Not an endorsement for deflation but this week I discovered this [1] because the Argentinian president mentioned that. In that context it makes me thought that the president cherry picked that work because his government economic measures are in that direction now. [1] "In Defense of Deflation": https://news.ycombinator.com/item?id=40206205 https://news.ycombinator.com/item?id=40206205
  - imtringued 2y ago
    The fed doesn't print "deficit money". They are forbidden from doing that and even if they did, who is going to spend it? The treasury prints money. Remember when Janet Yelled said she is ready to mint a one trillion USD coin in case it is needed to avoid the debt ceiling. What the Fed does is a duration transformation. Commercial banks can deposit US treasuries at the central bank and receive a claim on those treasures in the form of liquid central bank reserves. This is done because people keep holding more and more short term duration deposits in their checking accounts or at brokerage accounts. Buying a 10 year treasury with deposits that only have a 1 day duration is quite insane. This means that in practice whatever deposits you are keeping in your account are missing from the economy. The US federal government can run a deficit and it can run it regardless of the financing conditions. It will merely pay an exorbitant interest rate if it chooses to do so. Here is a loosely related paper: https://www.elsevier.es/en-revista-investigacion-economica-122-articulo-money-generalized-exchange-a-critical-S0185166715000375 https://www.elsevier.es/en-revista-investigacion-economica-1... In an equilibrium economy, the expected net money supply is always zero, that is, every dollar in the money supply is offset by a dollar in debt. So called inside money. If the neoclassical theory is true, then attempts at extracting seigniorage would immediately be spotted and no inflation could ever occur. The inverse is also true. If the government artificially restricted the money supply, people would find alternative means of providing themselves with the ability to exchange. So the expectation is that the government has zero power or ability to influence the economy with monetary policy. The only reason why it would have the ability to do so, is because it has made those alternatives illegal.
- mupuff1234 2y ago
  Economists say that, but I'd be curious to hear from the "common person" in Japan what they thought about the lack of GDP growth. Now almost certain it's not great for humanity in a long term view (less investments in the future etc) but I'm not sure it has to be worse for the present generation.
- narimoney 2y ago
  then an inflationary loop is just as scary... https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wage-Price-Spiral.jpg https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wa...
- vsuperpower2020 2y ago
  And when inflation becomes a self-reinforcing inflation loop, we get zimbabwae and argentina and venezuela. The US suffered a few years where I lost a bit over 10% of my savings and income per year. Inflation is currently taught as "correct" in schools but I suspect that's just the current trend.
  - kevin_thibedeau 2y ago
    It's "correct" for those with deep pockets who want the benefit of near zero interest rates steering people into their investment schemes. Force everyone onto a treadmill they control to reap exclusive rewards from the capital of others.
    - imtringued 2y ago
      You know those investment schemes are endorsed because they create jobs? Figure out a way to keep everyone employed without them and you have solved the problem.
blackeyeblitzar 2y ago
This is something I learned the other day. Inflation and deflation are both redistributing wealth. Each transaction has someone who is winning and losing. One isn’t automatically worse or better. Maybe it is that both can be bad if there is a lot of it.
- rootusrootus 2y ago
  > One isn’t automatically worse or better. Is that really true? Deflation sounds conclusively worse. Everyone starts to hoard money instead of spend it, and the economy goes into a tailspin. Any debt you pay back is with dollars that are worth less. Most anyone in debt, which is a lot of people, should prefer inflation.
  - ysavir 2y ago
    We probably shouldn't be basing our economy on debts then, as we tend to do.
    - cyberax 2y ago
      Why? Debts are like levers, they multiply both growth potential, and failure potential.
      - TimeBearingDown 2y ago
        Very true. My impression of the US over the past two decades at least though, is that financial services are bleeding many Americans dry even while they believe it’s all to their preferences - that they’re using the levers correctly, while any outside observer would say they’re being taken advantage of, even if it is their choice. Total credit card interest and fees paid by Americans are up 47% from the high of 2019 • Overall economic output continues to increase, but it drains so quickly, and increasingly to depreciating assets. Of the young adults I know, I ask if they do even have a rough budget. Only two couples said yes, none of the singles or other couples. I know many are paying large sums to interest on consumer debt, with student loans looming for later. I don’t have any other statistics, and now will seek them. It raises the question at least, how might we assess the benefit achieved thanks in part to loans to the majority of households over the past 50-100 years? • https://wallethub.com/edu/how-much-americans-pay-in-credit-card-interest-and-fees/129964 https://wallethub.com/edu/how-much-americans-pay-in-credit-c...
cyberax 2y ago
> Japan had deflation and as a normal person it was great. BS. Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! Japan has essentially zero GDP growth since 1990-s as a result.
- Glacia 2y ago
  >Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! I'm pretty sure Japan never had big unemployment problems, so your claim is BS. >Japan has essentially zero GDP growth since 1990-s as a result. GDP is a useless metric, only useful for politicians to brag about their "achievements".
  - cyberax 2y ago
    > I'm pretty sure Japan never had big unemployment problems, so your claim is Japan is solving unemployment by essentially creating BS jobs, like people standing on a corner and holding a sign saying that there's a corner nearby. Meanwhile, good high-paying jobs are extremely hard to get into, and are very stressful. Remember when it turned out during Fukushima accident that lots of people normally hired to work on the power plant, were essentially unqualified day laborers? That's why. Japan is NOT in a good place economically. They are essentially wasting millions of lifetimes of human capital.
- HPsquared 2y ago
  And yet, somehow, Japan's Human Development Index has been increasing consistently over the last 30 years. https://hdr.undp.org/data-center/specific-country-data#/countries/JPN https://hdr.undp.org/data-center/specific-country-data#/coun...
  - cyberax 2y ago
    It's mostly a reflection of rising life expectancy. That's great, but it's not really a result of the Japanese economic development.
laidoffamazon 2y ago
Uh, no? Japanese people are far poorer than Americans. Japan's GDP PPP Per capita is $33.8k, America's was $76.3k in 2022. That's more than double.
frumper 2y ago
Except several decades ago we shifted normal people's retirement accounts from pensions to stock market casino accounts.

Japan had deflation and as a normal person it was great. Less people got rich off the stock market casino though

by jbm 2y ago

Japan had deflation and as a normal person it was great. Less people got rich off the stock market casino though

Interesting. I guess things getting cheaper and cheaper can be enjoyable. What was your experience in term of doing business?

cs702 2y ago

When deflation becomes a self-reinforcing deflationary loop, as in the 1930's in the US, it's horrible: https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed/blog/2023/aug/ov/ovblog_deflationaryloop.gif https://www.stlouisfed.org/-/media/project/frbstl/stlouisfed... That's why Japan has been trying to fight deflation for decades.

cryptonector 2y ago
One of the key things that made the 30s so horrible was that Hoover and Roosevelt both pressured industry to not cut wages, which they complied with, but they cut employment instead.
- WalterBright 2y ago
  The key thing was the Fed mismanaging and misunderstanding how money worked. My dad (grew up in the 30s) said that simply "nobody had any money".
  - throw0101b 2y ago
    > The key thing was the Fed mismanaging and misunderstanding how money worked. The key thing was the Fed was (early on) complying with how the gold standard worked, which is a finite amount of cash being available, and only being able to be increased by having more of the shiny stuff. > When the Great Depression hit in 1929, the Fed’s instinct was to do little and let the economy and markets correct. But the Fed seemed to have no sense of how big the credit bubble from the 1920s was. Consequently, from 1929–1933, the Fed remained committed to a tight monetary policy. Under the gold standard then in force, when the gold balances held by the government contracted, the money supply did so as well. Faced with the increasing economic turmoil, US businesses and the public at large trusted gold more than paper currency. Overseas investors, fearing a potential devaluation of the dollar, preferred gold too. This created a gold drain. As the Fed’s gold stocks declined, the United States unwittingly reduced credit in the economy. Over the 1929–1933 period, the US money supply contracted sharply, declining by roughly one third between 1929 and 1933, and the country experienced its worst ever downturn, with unemployment soaring to roughly 25%. * https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost-of-1937-the-fed-stalls-on-rate-hike/ https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost... This is one of the reason why the gold standard (or any "hard" currency) is a bad idea: * https://www.moneyandbanking.com/commentary/2016/12/14/why-a-gold-standard-is-a-very-bad-idea https://www.moneyandbanking.com/commentary/2016/12/14/why-a-... The sooner the US (and other countries) got off the gold standard, the sooner their economies started to recover: > In the end, recovery from the Great Depression does not begin until countries give up on the combination of the Bagehot Rule and of commitment to sound gold-standard finance. Those countries that have central banks willing to print up enough money so that people are willing to spend it--it is when you adopt such policies that your economy begins to recover. If you don’t, you become France, which sticks to the gold standard all the way up to 1937, and never gets a recovery. When World War II begins, Nazi Germany’s production--equal to France's in 1933--had doubled between 1933 and 1939. French production had fallen by 15%. * https://delong.typepad.com/delong_long_form/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html https://delong.typepad.com/delong_long_form/2013/10/the-grea... There was a misstep in 1936 when there was pressure to raise rates and also to reduce spending due to deficits, and so rates were raised and austerity was enacted… and the economy tanked again.
  - ramesh31 2y ago
    >My dad (grew up in the 30s) said that simply "nobody had any money". People hear this and think "everyone was broke", but there literally was just no money. We hadn't fully figured out modern monetary policy at that point, and the old ideas of austerity reigned supreme for policymakers.
    - WalterBright 2y ago
      Your clarification is accurate.
    - OscarCunningham 2y ago
      I remember thinking about this when my dad lost his job after the 2008 crash. He worked on machines that made computer chips. People still wanted computer chips. And yet there was no means to connect the two.
    - cryptonector 2y ago
      > the old ideas of austerity reigned supreme for policymakers. And yet, no. No one spoke of austerity. The government wasn't austere. Hoover's Treasury Sec., Andrew Mellon, wanted to "liquidate, liquidate, liquidate" in 1929, but that didn't happen. More government largesse than Roosevelt went with would not have resolved things, not all other things being equal.
  - cryptonector 2y ago
    I think there were a lot of problems, but most of them boil down to "heavy-handed government intervention in the markets". That includes pressure to keep wages high and mismanagement at the Fed.
    - throw0101b 2y ago
      > I think there were a lot of problems, but most of them boil down to "heavy-handed government intervention in the markets". The Fed was very hands off in the early 1930s: > […] At the onset of the Great Depression in 1929–1930, the Fed maintained a “hands-off” approach, believing the economy simply needed to “wring out its excesses.” This is somewhat ironic in that Fed policy itself greatly contributed to the financial excesses of the 1920s. Nevertheless, the Fed failed to recognize the nature of the economy. > When the Great Depression hit in 1929, the Fed’s instinct was to do little and let the economy and markets correct. But the Fed seemed to have no sense of how big the credit bubble from the 1920s was. Consequently, from 1929–1933, the Fed remained committed to a tight monetary policy. Under the gold standard then in force, when the gold balances held by the government contracted, the money supply did so as well. Faced with the increasing economic turmoil, US businesses and the public at large trusted gold more than paper currency. Overseas investors, fearing a potential devaluation of the dollar, preferred gold too. This created a gold drain. As the Fed’s gold stocks declined, the United States unwittingly reduced credit in the economy. Over the 1929–1933 period, the US money supply contracted sharply, declining by roughly one third between 1929 and 1933, and the country experienced its worst ever downturn, with unemployment soaring to roughly 25%. * https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost-of-1937-the-fed-stalls-on-rate-hike/ https://blogs.cfainstitute.org/investor/2015/09/17/the-ghost... It was the interventionist policies of new New Deal and its various spending and jobs programs that helped the recovery begin. As well as getting off the gold standard: * https://delong.typepad.com/delong_long_form/2013/10/the-great-depression-from-the-perspective-of-today-and-today-from-the-perspective-of-the-great-depression.html https://delong.typepad.com/delong_long_form/2013/10/the-grea... If you think things are bad with government intervention and regulation, you may wish to examine history about things before it became a thing: * https://en.wikipedia.org/wiki/Panic_of_1893 https://en.wikipedia.org/wiki/Panic_of_1893 * https://en.wikipedia.org/wiki/Panic_of_1896 https://en.wikipedia.org/wiki/Panic_of_1896 * https://en.wikipedia.org/wiki/Panic_of_1907 https://en.wikipedia.org/wiki/Panic_of_1907 IMHO the (US) financial system has been much more stable with more of a government / Fed hands-on approach. Certainly there were crashes (1987) and bubbles (1999), but that was more on the private sector side. At least one problem was due to not enough oversight: * https://en.wikipedia.org/wiki/Savings_and_loan_crisis https://en.wikipedia.org/wiki/Savings_and_loan_crisis
- deleted 2y ago
  [deleted]
- imtringued 2y ago
  Cutting wages never works because you need to cut the wages according to the marginal utility of a dollar and cut the wages where the utility per dollar is lowest. Now here is a rhetorical question, who exactly do you think has the power to set wages? Obviously those with a low marginal utility of money. This means the wages of those with the highest marginal utility get cut. The money saved from the wage cuts will find its way to the capital markets, while the money spent on consumption has decreased leading to a reinforcement of the problem. This will have to continue until the person with the lowest marginal utility of money has received a wage cut, which generally happens when the company goes bankrupt.
  - cryptonector 2y ago
    Perhaps, but when the industry doesn't cut wages because the government insists on it, and instead you get high unemployment, that's not better.
  - randoglando 2y ago
    What does "marginal utility of money" mean? Is the person with the lowest "marginal utility of money" the CEO?
WalterBright 2y ago
There is no more a deflationary loop than an inflationary loop. Inflation/deflation happens when there is a mismatch between the supply of money and the value of goods and services in the economy. This mismatch usually happens because the central bank prints deficit money. Deflation in the 1930s happened because the Fed went the other way, refusing to create money. This continued until the late 30s when the Fed changed course, and (you guessed it) produced lots of inflation.
- wslh 2y ago
  Not an endorsement for deflation but this week I discovered this [1] because the Argentinian president mentioned that. In that context it makes me thought that the president cherry picked that work because his government economic measures are in that direction now. [1] "In Defense of Deflation": https://news.ycombinator.com/item?id=40206205 https://news.ycombinator.com/item?id=40206205
- imtringued 2y ago
  The fed doesn't print "deficit money". They are forbidden from doing that and even if they did, who is going to spend it? The treasury prints money. Remember when Janet Yelled said she is ready to mint a one trillion USD coin in case it is needed to avoid the debt ceiling. What the Fed does is a duration transformation. Commercial banks can deposit US treasuries at the central bank and receive a claim on those treasures in the form of liquid central bank reserves. This is done because people keep holding more and more short term duration deposits in their checking accounts or at brokerage accounts. Buying a 10 year treasury with deposits that only have a 1 day duration is quite insane. This means that in practice whatever deposits you are keeping in your account are missing from the economy. The US federal government can run a deficit and it can run it regardless of the financing conditions. It will merely pay an exorbitant interest rate if it chooses to do so. Here is a loosely related paper: https://www.elsevier.es/en-revista-investigacion-economica-122-articulo-money-generalized-exchange-a-critical-S0185166715000375 https://www.elsevier.es/en-revista-investigacion-economica-1... In an equilibrium economy, the expected net money supply is always zero, that is, every dollar in the money supply is offset by a dollar in debt. So called inside money. If the neoclassical theory is true, then attempts at extracting seigniorage would immediately be spotted and no inflation could ever occur. The inverse is also true. If the government artificially restricted the money supply, people would find alternative means of providing themselves with the ability to exchange. So the expectation is that the government has zero power or ability to influence the economy with monetary policy. The only reason why it would have the ability to do so, is because it has made those alternatives illegal.
mupuff1234 2y ago
Economists say that, but I'd be curious to hear from the "common person" in Japan what they thought about the lack of GDP growth. Now almost certain it's not great for humanity in a long term view (less investments in the future etc) but I'm not sure it has to be worse for the present generation.
narimoney 2y ago
then an inflationary loop is just as scary... https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wage-Price-Spiral.jpg https://www.wallstreetmojo.com/wp-content/uploads/2022/04/Wa...
vsuperpower2020 2y ago
And when inflation becomes a self-reinforcing inflation loop, we get zimbabwae and argentina and venezuela. The US suffered a few years where I lost a bit over 10% of my savings and income per year. Inflation is currently taught as "correct" in schools but I suspect that's just the current trend.
- kevin_thibedeau 2y ago
  It's "correct" for those with deep pockets who want the benefit of near zero interest rates steering people into their investment schemes. Force everyone onto a treadmill they control to reap exclusive rewards from the capital of others.
  - imtringued 2y ago
    You know those investment schemes are endorsed because they create jobs? Figure out a way to keep everyone employed without them and you have solved the problem.

blackeyeblitzar 2y ago

This is something I learned the other day. Inflation and deflation are both redistributing wealth. Each transaction has someone who is winning and losing. One isn’t automatically worse or better. Maybe it is that both can be bad if there is a lot of it.

rootusrootus 2y ago
> One isn’t automatically worse or better. Is that really true? Deflation sounds conclusively worse. Everyone starts to hoard money instead of spend it, and the economy goes into a tailspin. Any debt you pay back is with dollars that are worth less. Most anyone in debt, which is a lot of people, should prefer inflation.
- ysavir 2y ago
  We probably shouldn't be basing our economy on debts then, as we tend to do.
  - cyberax 2y ago
    Why? Debts are like levers, they multiply both growth potential, and failure potential.
    - TimeBearingDown 2y ago
      Very true. My impression of the US over the past two decades at least though, is that financial services are bleeding many Americans dry even while they believe it’s all to their preferences - that they’re using the levers correctly, while any outside observer would say they’re being taken advantage of, even if it is their choice. Total credit card interest and fees paid by Americans are up 47% from the high of 2019 • Overall economic output continues to increase, but it drains so quickly, and increasingly to depreciating assets. Of the young adults I know, I ask if they do even have a rough budget. Only two couples said yes, none of the singles or other couples. I know many are paying large sums to interest on consumer debt, with student loans looming for later. I don’t have any other statistics, and now will seek them. It raises the question at least, how might we assess the benefit achieved thanks in part to loans to the majority of households over the past 50-100 years? • https://wallethub.com/edu/how-much-americans-pay-in-credit-card-interest-and-fees/129964 https://wallethub.com/edu/how-much-americans-pay-in-credit-c...

cyberax 2y ago

> Japan had deflation and as a normal person it was great. BS. Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! Japan has essentially zero GDP growth since 1990-s as a result.

Glacia 2y ago
>Deflation means that (on average) people can't afford to buy goods. They simply don't have money to do that! I'm pretty sure Japan never had big unemployment problems, so your claim is BS. >Japan has essentially zero GDP growth since 1990-s as a result. GDP is a useless metric, only useful for politicians to brag about their "achievements".
- cyberax 2y ago
  > I'm pretty sure Japan never had big unemployment problems, so your claim is Japan is solving unemployment by essentially creating BS jobs, like people standing on a corner and holding a sign saying that there's a corner nearby. Meanwhile, good high-paying jobs are extremely hard to get into, and are very stressful. Remember when it turned out during Fukushima accident that lots of people normally hired to work on the power plant, were essentially unqualified day laborers? That's why. Japan is NOT in a good place economically. They are essentially wasting millions of lifetimes of human capital.
HPsquared 2y ago
And yet, somehow, Japan's Human Development Index has been increasing consistently over the last 30 years. https://hdr.undp.org/data-center/specific-country-data#/countries/JPN https://hdr.undp.org/data-center/specific-country-data#/coun...
- cyberax 2y ago
  It's mostly a reflection of rising life expectancy. That's great, but it's not really a result of the Japanese economic development.

laidoffamazon 2y ago

Uh, no? Japanese people are far poorer than Americans. Japan's GDP PPP Per capita is $33.8k, America's was $76.3k in 2022. That's more than double.

frumper 2y ago

Except several decades ago we shifted normal people's retirement accounts from pensions to stock market casino accounts.