Redpill me on deflation
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I've been trying to understand this shit for 3 months, listening to hundreds of podcasts. Only takeaways: no one knows if inflation or deflation is coming, CPI is a meme, and tech is deflationary.
FUNDAMENTAL & NECESSARY
I have a bachelors in Econ from a state uni and I don’t really know, it makes money worth more but it’s bad cuz it lowers gdp I guess
if people believe prices will fall then nobody consumes anything (because it will be cheaper tomorrow) which leads to people losing their jobs no taxes getting payed etc.
Another problem is that if you DONT have inflation then your debt doesnt wither away with time. This is a problem because every country has unpayable debt.
DMM / DMG. 6% APR and DMG voting rights. Look into it.
deflation is a decrease in the money supply. by money supply, we mean the volume of money circulating for goods and services. this decrease in volume of the circulating currency makes the currency more scarce and therefore more valuable. this is not inherently bad. in fact in a normal world, it is good. it means your savings and income is worth more and you can get more for your money.
In the clown world we live in however, it is disastrous, for two major reasons. Debt and consumerism are the bedrock of our entire worldwide economy. deflation fucks our shit up because
1) it makes debt more expensive to pay(because there is now LESS money available)
this can lead to banks becoming insolvent and they can now no longer issue new debt. this means the debt-consume cycle stops.
2) it decreases consumerism because now that the supply of money is lower it is more valuable and must be spent more carefully. and because debt is harder to acquire people cant borrow money to buy shit they dont need.
so in a world of debt and consumerism, a deflationary spiral leads to mass unemployment, poverty and depression.
To combat this deflationary force, central banks print money and inject it straight into the economy, meaning people have more money to spend on goods and services. This increase in money supply is caused inflation and makes the currency LESS valuable. Over time, they print too much and lose control by hyperinflation and all fiat currencies return to their inherent real value - they become worthless.
People stop spending money because they know their money will be worth more in the future. This leads to a cycle of money becoming more scarce, leading to less spending, leading to a slowed down less productive economy.
cringe pop econ take
>it’s bad cuz it lowers gdp I guess
nominally....
there is absolutely no evidence QE leads to inflation, stop talking out of your ass.
look at Japan, their QE program is incredibly extensive, the central bank is even buying stocks, and they can't get inflation to save their lives.
The idea is to have the monetary measurement stick be deflationary working with a correlated inflationary currency.
I.e. bitcoin standard > collateralized > fractionalised > hypothecated > inflationary currency
not an argument
increase of the money supply is inflation by definition.
>increase of the money supply is inflation by definition
brainlet
when capital pays you to hold it, you only allocate capital to worthy projects
the scrutiny on what to allocate capital towards would increase
the quality demanded from projects would increase
products and services everything would increase in quality, speed, effectiveness, etc
>increase of the money supply is inflation by definition.
this is incorrect. inflation means increase in consumer prices. you have a schizo-definition of inflation. that's all fine and dandy but don't call it inflation, call it smurf-flation or something.
QE might lead to smurf-flation but it doesn't lead to inflation.
Do you watch jeff and emil?
But wouldn't people be investing with that money if it's worth more? Even if they leave it in the bank, the bank will invest with that money. Isn't that good for developing capital goods?
Hes right. up until the 70's inflation was defined as an expansion of the supply of cash and credit.
The definition was changed in the 70's during a period of heavy stagflation, probably so the populace didnt start beheading bankers
It literally doesn't matter how it was defined 50 years ago.
riddle me this; what purpose those your idea of inflation serve? if money suppley is expanded by 30% but all prices stay the same then what difference does it make?
how is your measurement useful?
its what happen when efficiency increases: you can make and buy more with the same dollar. Govs and banks siphon this off and call it 'fiscal policy'. When lots of money is destroyed it is deflationary and if created inflationary.
>riddle me this; what purpose those your idea of inflation serve? if money suppley is expanded by 30% but all prices stay the same then what difference does it make?
In your example, this would still be a fine concept to apply in this manner - since there would be more supply. The supply would be inflated. The only difference between the Econ definition and this example, would be that this type of inflation would lead to a mean increase in purchasing power (since prices stay the same).
It’s useful to talk about inflation in such a way, with Hayek money, for example.
Coins that take your coins for every transaction is a scam
no there will be no increase in purchasing power in my example, that's what we're seeing.
massive QE does not lead to increase or decrease in purchasing power.
that's why your definition of inflation makes no sense, yes we have QE, no it doesn't affect prices, so your "inflation" tells me nothing.
It matters because consumer prices become more sensitive to the velocity of money when the supply is increased.
Consumer price inflation is never measured properly anyway
By literal definition, if prices stay the same - but supply increases, the holders of this supply sees an increase in purchasing power.
I don’t think you really read my reply. Look into Hayek money, or try to understand how something like Ampleforth works, to see how this version of inflation is valid.
there is no increase in purchasing power because the money ends up in the stock market, gold, real estate.
people who consume arent getting any richer and that's why money expands but prices and purchasing power stays the same.
Inflation = the same nominal value of dollars has less purchasing power
deflation = the same nominal value of dollars has more purchasing power
You're probably asking yourself why this is bad. Well, currency prices start to have impacts on things like our national debt, trade, and how fast money enters the economy (dollar velocity). A healthy level of inflation is basically like economical lubrication, without it everything kind of just grinds and comes to a stop. Hope this was helpful and accurate
you fucking RETARDS. you LITERALLY fell for jewish banking tricks. imagine not knowing austrian economics.
this board really if full of fucking idiots. you will all die poor.
A reason Deflation is "bad" because the only economics anyone cares about is the S&P 500. If the dollar becomes more valuable, a stock that carries the same value will appear to drop in dollar price. Every politician does not want this because "the dow is at 30000" sounds better than "well the dw is at 20000 when it was 30000 but really it's worth more because (reasons 99% of americans do not and will never understand)
Thus government will always seek inflation over deflation no matter the costs.
ok let's say I accept your definition we have hyperinflation.
what difference does it make if all prices stay excactly the same?
>CPI is a meme, and tech is deflationary
why these 2 user?
People will still buy food, clothes, shelter and other things they need. It just discourages mindless consoomerism.
>what difference does it make if all prices stay excactly the same?
you keep vaguely using the term 'prices' without referring to anything specific. if you refer to essential and luxury consumer goods, then the only reason we havent had substantial increase in prices is because the inflated currency has not made its way into these channels(yet). QE has led to excess money making its way into stocks and real estate. hence we say massively artificial highs in these asset classes.
aside from the corona stimulus package, newly created money has not yet made its hands directly to the consumer, available for spending. what do you think will happen when stimulus inevitably becomes consistent, and people have an abundance of newly acquired, freshly printed money at their disposal? are you naive enough to think prices of consumer goods will remain the same? rent will remain the same?
remember, prices of consumer goods can rise for two reasons
1) demand increases
2) the currency inflates, therefore, more units of currency are needed to purchase the same amount of goods