China's Xi Jinping asked 'What’s so bad about deflation?' amid economic slowdown, report says
China's Xi Jinping asked 'What’s so bad about deflation?' amid economic slowdown, report says
"Don’t people like it when things are cheaper?" Chinese President Xi Jinping reportedly asked his advisers.
He's dead right.
Humanist economics has a central pillar: abundance. Profit maximization requires scarcity, and geopolitical or other suppression of competition. In addition, higher interest rates prevent abundance, and funding of supply increases of farming production, and increase housing costs, insurance greed, and so affordability of other stuff.
The war on Russia led to higher interest rates in order to ration oil use, and employment, again limiting production.
Deflation is not even bad for the rich. Lower interest rates stabilize housing prices, and reduce government deficits, and improve financial asset values. Wages don't generally go down, and they definitely don't go down under policies of abundance.
Abundance means more work is available. Prices are lower letting workers and others afford more stuff leading to more abundance. UBI is the most important anti-slavery (also humanist) and prosperity (also humanist) policy alternative. It is inflationary, but makes high paying work that outpaces inflation easy to find.
The key about inflation vs deflation is how balanced income growth is relative to inflation. If it is only oligarchy making income/wealth gains, then you should address your complaints to that structure instead of the inflation.
The problem with deflation is that people end up hoarding all their cash because you get a return on it without doing anything with it.
So large swathes of money start getting taken off the playing field. Investment dries up, growth slows, people get laid off, and this cycle continues, one thing causing the next, causing the next in a circle. It's one of the most destructive forces possible to an economy.
That's why the central banks strive for around 2%. It's enough to force people with cash lying around to invest it in something useful which will create jobs, etc, but not so high that it will make everyone panic and run the banks.
It's a fair point, and typical thinking, but wrong. Deflation is better than inflation.
First, in general asset inflation vs goods inflation is usually different. Then for goods inflation, there is no good measure. Substitute goods exist.
Asset inflation definitely improves lives of the rich. Your "hoarding scare" can happen when savings/bond rates are higher than inflation. That is the genuine hoarding motivation. Lower interest rates supported by deflation supports more borrowing for more production/housing, with lower financing costs passed on to consumers. Either way, all money in the banking/financial system is hoarded money, and fractional reserve lends more the more demand for money there is. Deflation is better than inflation for this.
For goods, electronics and now EVs are deflationary. Your phone from 2008 cost the same as one from this year while having 100x less power/apps/value. While it can make sense to wait on tech/value improvements, competition/innovation creates work, and the deflation is the cause of that innovation, and there is a replacement cycle. Energy, food, clothing deflation would allow for higher consumption and also more work, though rarely would there be expectation of continued sustained deflation. Deflation is always technology or imported/slave labour costs. Never domestic wage reductions, unless slavery pressures can be manifested. Tariffs can stop it though.
Any economic competition creates a deflationary pressure. Deflation can be renamed value enhancement. When you favour inflation over deflation you are saying, "scarcity good, competition bad, innovation bad"
On the flip side, we've seen with inflation that just amazing amounts of debt have been created, with consumers massively underwater spending way beyond their means, leading to things like house values blowing up completely unsustainably.
So inflation is not automatically better, it's just a different kind of bad.
nooooo we need endless economic growth forever and ever
Even more than most, China’s current reality is based entirely on explosive growth, which they’ve had plenty of in the last 20 years.
Now he's just dabbing on us.
I bet he never has to check his bank balance before he goes to the grocery store.
Another thing he has in common with over a billion Chinese citizens
The main reason global markets aren't absorbing the demand is sanction on chinese produced goods. But anyhow it will be interesting to see how the renewable energy boom picks up steam. Jupiter 1 hydrogen gas generator engine is a pretty huge milestone.
Jupiter 1 hydrogen gas generator engine
https://newatlas.com/energy/worlds-largest-pure-hydrogen-electrical-generator/
at 15kg per kw, this is 300x less efficient than a fuel cell for just electricity output. Distributed fuel cells can use waste heat for domestic hot water needs.
A better use of combusting H2 for electrical power generation, is changing the input valves on electrical generating NG turbines. That is just 2x less efficient than a fuel cell.
Fuck sanctions.
If domestic producers want domestic buyers, they should lower their prices to be competitive and take less profit as a result. But they won't do that if they can have the government step in to artificially raise the prices of competitors' products.
If they can't do this while paying employees respectable wages, then it shouldn't be up to the government to step in and bail them out.
We're literally letting the government force us to have worse deals so people richer than us can be even richer at our expense.
Deflation is a great thing.
The working class has been conditioned to think it's "bad" and inflation is "inevitable" because inflation is how the ruling class recoups any gains the working class has made, with interest.
Personally, I think it goes a bit deeper than this. Insecure people always want to feel they "know" everything, so they will often overreach and make claims about something they don't understand just to look smart and fit in. For example, always using the word "consumer" instead of "customer." They want to sound smart, like they went to school and learned about consumers, but they don't realize how they're acting without thinking. It's all a show to avoid admitting they don't really know what they're talking about.
Inflation is the same. Since it's almost guaranteed to happen and it benefits the ruling class, the average worker has been conditioned to see it as beneficial. They are praised for going along with the narrative that inflation is necessary and it makes them "feel smart" even if they are incorrect.
Saying "communism doesn't work" is another example.
aren't you doing the thing you are criticizing? because to me you are trying to sound like you know everything as well.
Yes that comment is 5% saying something and 95% shitting on unnamed people in an attempt to claim elite knowledge.
Nah. I'm not trying to fit in, which you seem to have conveniently ignored.
I could be wrong, but the evidence points to inflation being a result of the working class having more spending power. It means that no matter what gains the working class makes, the ruling class will take them back with interest.
If you think this is incorrect, feel free to say why.