STOP

STOP

You have ten seconds to tell me why deflation is a bad thing

Other urls found in this thread:

youtu.be/GCQfMWAikyU?t=4m18s
youtube.com/watch?v=Bkm2Vfj42FY
twitter.com/SFWRedditImages

Prevents investment in capital because people can make money by speculating on money.

Nothing is wrong with it, if it occurs naturally within the market. Costs go down, wages generally stagnate, and then begin to fall as a result, and purchasing power rises dramatically.

However, when the government influences it, it causes costs to go up, wages to drop, and purchasing power to lessen dramatically.

The government is fucking horrible at every single job it does, private industry will ALWAYS be better in every aspect than the government. Private industry has consequences to its actions and a limited, realistic, budget.

The economy is stagnating.

>people can make money by speculating on money.
They do that now
They take out loans speculating on continued inflation

>However, when the government influences it,
When have they ever done this
> it causes costs to go up
wat

It is a good thing for people with savings, a bad thing for people with debt.

If you owe 10,000 USD and the dollar undergoes deflation, you have to work harder for that 10,000. If you owe 10,000 and there's inflation though, you don't have to work as hard.

the problem is that most peoples net worth is largely tied to the value of their home

deflate the economy and their assets evaporate overnight leaving many underwater financially

if your money is becoming more valuable by doing nothing, it becomes profitable.people will horde it this will mean ppl will stop spending money on other stuff an economy depends on people buying stuff

I AM NOT SAYING SPEND MONEY RECKLESSLY

It's fine unless you're the petrodollar country, which we are. There's no point to do anything other than push for inflation since our currency is forcibly tied to oil by OPEC (they only sell oil for US dollars). That's why Trump said we could literally just print more money to get out of debt. It sounds retarded to normies, but he's actually in on the petrodollar concept and understands the rest of the world absorbs the harm of inflation as long as oil is something a modern nation needs to survive (which will remain the case for the foreseeable future).

youtu.be/GCQfMWAikyU?t=4m18s

If you devalue your currency to low you'll doom your entire civilization.

You don't make money by taking out loans with interest where the present value of the asset deteriorates.

If you're referring to QE, they use that money to invest/speculate and the return on that is higher than the interest and inflation associated with the loan.

>It is a good thing for people with savings, a bad thing for people with debt.
So it incentivises people to take on debt then
>deflate the economy and their assets evaporate overnight leaving many underwater financially
This isnt good thing
People should look at housing as an expense not an investment
>will stop spending money
We have had massive deflation in most consumer goods yet people are not holding off on buying them

>devalue your currency
>deflation

>People should look at housing as an expense not an investment


agreed but the transition from home as a store of value to home as a drain on resources will be violent

I'm not saying don't do it but it's gotta be done carefully or a lot of mostly older people will get fucked over bad

>or a lot of mostly older people will get fucked over bad
Their kids who will benefit from it can help them out

Its not?

It's not, especially if its a slow deflation. Just means shit gets more affordable.

It's pretty decent at dropping bombs, to be fair.

But yeah, shy of killing, it's a pretty worthless thing.

some yes other without kids not so much

like I said careful planning

>yes other without kids not so much
Should have had kids

If you have an expectation that by just sitting on top of your money it'll be worth more, why would you invest?
Inflation creates an incentive to invest. If your money is losing value, might as well spend it in activities that provide profit over the inflation expectation and not lose your initial capital.

Its fine for a short period, however the logical end to deflation is that it acts as a disincentive for investment, as your money ends up being more valuable over time.

The effect is that more and more money ends up being invested in debt, normally Government debt, rather than in capital creation, and over the years a country's capital stock begins to decline.

Japan is the best example of this, but they are fucking strange as they've had a 15 year recession, in which GDP per capita has increased.

If Japan, once they stabilize their population, can begin GDP growth, then there literally is nothing wrong with it, however, for it to be positive in any way you need to essentially have little to no immigration, and you need to, as a people, a culture and reach a consensus between enough economic classes, that this is in your nations best interests.
That's a pretty hard sell to the west given our current shenanigans.

>why would you invest?
because the assets have actual value

>deflation causes purchasing power to lessen.
The main problem with inflation(not deflation) is that poor/middle class people rely on cash a lot more than people with higher incomes. When inflation occurs it doesn't hurt higher income people as much because most of their money is tied up in capital that adjusts to inflation so they don't really lose money. Poor people don't really have that luxury because they are always in need of liquidity because if something bad happens they need everything they have to pay for it.

The main problem with deflation is that if people think they will make money holding onto money as opposed to investing in capital people will just hoard money, and it causes liquidity problems.

That being said in reality inflation/deflation have very little effect on long term growth if you study the history of how economies grow.

inflation is needed to drive the market.

if there is the possibility that a product will become more expensive in the future then consumers will buy it immediatly, even with credit.

if there is the possibilty the product will become cheaper in the future then consumers stop spending, and starting saving.

saving = bad
credit = good

this is litrially how the global jew bank wrecks your shit, they want you to be shackled by the chains of debt.

The more money there is in the world will lose it's value. Regardless of the amount of gold backing up the value of any countries currency and whatever important trades they may hold will be made useless unless prices are brought down, and the population is decreased, furthering the fundamental value of a single dollar for any one product. Dummy.

>the product will become cheaper in the future then consumers stop spending,
prices of electronics and other crap from china have been going down for ever yet people are still buying them

I was referring to currency not goods a price drop in goods will be good in most scenarios

Prevents (((them))) from enslaving us.

>if there is the possibility that a product will become more expensive in the future then consumers will buy it immediatly, even with credit.

You lot would know that given you giant fuck off housing bubble.

>saving = bad
>credit = good
Wrong. But not heinously wrong. Savings is in most economic theory assumed to become investment, due to banking etc. The issue with deflation, is why risk investing in capital with those savings, and giving credit to others... while money is just earning value on its own.
If there is an annul 1% deflation, then all investments need to net at least 4% annual return in order to be worth the risk lending to banks, these banks then further want a return of their risk and therefore the interest rate is increased, as there is an incentive to not invest immediately.

>t. never been poor
scrimping is only possible under deflation

If deflation is know, investors hold out for the bottom and then the stagflation cycle commences. Deflation is only good for people with money to burn, everyone else gets screwed as stagnation creeps in.

Deflation causes capitalists to horde their goods and invest less which in turn leads to shortages and mass layoffs, which in turn decrease consumption, which causes more hording and less investment, and so on. It's the fastest way to guarantee communism so I am generally all for it.

Overall nothing, if you're an economist everything
Markets demand investment, investment demands return, therefore markets must exhibit relative growth. If you want large, open markets then you want relative growth, and inflation is a cheap and easy way to get that.

If you're the US and allow put options on stock then it gets worse, once I notice a lack of growth I can take out put options on that stock, if it continues to fail to grow I get money from them and they continue to shrink. If I then declare a negative interest rate it's the same as declaring an average negative growth of the market, and rather than investing it becomes more profitable to take out put options, which then snowballs and crashes the market.

The obvious solution to this is then to just ban trading on put options, something burgers won't do.

Of course the impact this has on you depends on your liquidity. If you have a large amount of capital then you are probably tied into the market and will benefit directly else you will not. Overall this then creates a clear divide between those with enough money to hold substantial investments in stocks and bonds against those who do not.

Conversely if you start deflating then you reduce growth which impacts people with higher liquidity (read more money) than those who are mostly using cash. Given people with lots of money have more control over the market and that they dont want to lose that money, they are against deflation.

>You have ten seconds to tell me why deflation is a bad thing
It's not bad. Globalist bankers tells us it is bad, for their capital is tied to stock.
Regular people have a savings account with cash.
So the value of cash should go down, so the value of stock can go up.

yeah its not like we also had that under inflation

People speculate that prices will keep plummeting, and hold up spending, which results in reduced demand, which results in prices dropping, and back to the beginning.

The problem with deflation is that it retards spending and investment, and reduces money in circulation.

Plus, it's hard to get rid of deflation. it isn't a simple matter like >dürr print moar money.

I want the cost of living to go down too, who doesn't want cheaper prices on everything? but no one should actively advocate for deflation.

Another problem with deflation is sticky prices, in the short run a lot of goods might not have an appropriate price decrease, whereas wages are a bit more flexible.

not a big deal as long as technology is advancing

We currently have negative interests rates in Europe, which is the practice of devaluing the currency, via inflation, but then directly handing all of that value over to the Banks.
During an inflationary environment, it hurts the poor, somewhat but almost always hurts the rich even more.

youtube.com/watch?v=Bkm2Vfj42FY

The question and answer session can get quite commie, but otherwise this is quite good. Plenty of video's for those who know basic economic terms.

Most businesses, households, and governments are in debt. As long as they expect their income to increase or at least remain constant, they can usually pay their debt. If there's deflation, suddenly their income shrinks relative to their debts and the debt may become unservicable - then the creditor calls in the loan and takes control of the asset. This means that people can no longer use their cars (financed) to drive from their homes (mortgaged) to the factory (also paid for with debt) and produce value. People stop producing value. Deflation accelerates. Total financial collapse.

This would be preventable if our economy wasn't based on borrowing, but the advantages of a debt-based economy are so great that it's better just to try and prevent deflation at all costs (so far).