Earlier quoted context omitted.
Yes, if things were actually getting cheaper that would be "deflation" and it would probably be bad.
Can someone please school me on why that would be bad?
Because rich people like to make more money, not less
US annual inflation declines to 7.1% in November vs. 7.3% expected
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Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#22the punishment will continue until you're hurting.
That's the point. Fewer dollars chasing the same basket of goods. This slows the acceleration of price increases.
Once a certain threshold in the cost of money is reached, malinvestment will dwindle. In many cases, it already has. You're left with a system of dollars chasing legitimate investments.
Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#23Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#24Earlier quoted context omitted.
Yes, if things were actually getting cheaper that would be "deflation" and it would probably be bad.
Can someone please school me on why that would be bad?
If the expectation is that everything will be cheaper next month than this month, that creates an incentive for everyone (and every business) to delay purchases as long as possible (because they will save money buying in the future). When everyone slows spending at once, it can lead to severe a recession or depression.
Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#25Earlier quoted context omitted.
Yes, if things were actually getting cheaper that would be "deflation" and it would probably be bad.
Can someone please school me on why that would be bad?
People, entities and states with debts benefit from the money they borrowed last year being worth less than it is today in terms of paying things back, debt to income, etc.
Also by using inflation to deteriorate savings and cash on hand, it encourages people to invest their money into something that won't lose value over time.
Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#26i guess the thing in ukraine is paying off for the us. eu gives its energy shackles to an ally at a much greater cost
Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#27Earlier quoted context omitted.
It’s amazing seeing all of society stumbling towards re-learning basic economics after being in a collective fugue/mass delusion for 2020-2021. Fed discovers relationship between interest rates and inflation, more at 11.
People have been "delusional" in a sense since the late 90's when inflation slowed to a crawl and everyone got used to stable prices. If inflation had been ~1% higher over these last decades, prices wouldn't be far off from where they are now and people wouldn't have flipped out so dramatically over the sudden adjustment.
Similarly, I find myself laughing when people describe this as a high-rate environment. Or when they blame the relatively brief Covid ZIRP for wide ills. The ZIRP of the 2010s is still confusing people.
Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#28Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#29Earlier quoted context omitted.
Can someone please school me on why that would be bad?
If the expectation is that everything will be cheaper next month than this month, that creates an incentive for everyone (and every business) to delay purchases as long as possible (because they will save money buying in the future). When everyone slows spending at once, it can lead to severe a recession or depression.
No post body was provided.
Re: US annual inflation declines to 7.1% in November vs. 7.3% expected
#30Earlier quoted context omitted.
You’re incentivized to avoid spending money.
Why would that be bad?
Because your paycheck is someone else's "spending money."
Edit: Meaning that, presumably, you like being paid. So you probably don't want to incentivize being paid less, or not at all. Deflation does both of those things.