151–160 of 163 posts
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Yes, if things were actually getting cheaper that would be "deflation" and it would probably be bad.
Reversion of price levels to standard increase slope is actually termed dis-inflation. https://www.investopedia.com/ask/answers/032415/what-differe...
> Disinflation occurs when price inflation slows down temporarily [...] Prices do not drop during periods of disinflation
Am I misunderstanding?
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You can't slow inflation by raising interest rates without slowing the economy. There are no rainbow unicorns here. The best outcome here is a so-called "soft-landing" in which growth slows but we don't have a recession or spike in unemployment. Taking the recent jobs report and this CPI report, we might just get that soft landing we need. Also, fyi, while wages overall did not keep up with inflation, they did in the…
We're not going to get a soft landing. They're going to push unemployment up to 6-8% to accomplish their policy goals of containing wage inflation and breaking the back of unionization drives (probably closer to 8% after something like CMBS detonates in about a year or so). That wage inflation in lower paying jobs is actually what concerns policymakers. Talk about a "soft landing" is very 2006-ish.
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Any evidence for your claim that deflation following a period of inflation has fewer (or none) of the harms associated with deflation? Any reason to believe that central bankers are in a good position to fine tune to get just the right amount of deflation and not overdo it, given that they already struggle with the same for inflation? Any reason to believe that the dynamics of a car diving in a line are comparable to…
If you're waiting for undisputable hard evidence of any macroeconomic theory, you'll be waiting a long time. The global economy is constantly changing and evolving and nations interact and trade in different ways over time. I have no faith in central banks to engineer a perfect landing, that's not the argument, it's simply that the concept of "deflation = bad" is not necessarily a universal truth.
once the SPR cannot be drained to manipulate gasoline costs, things will get interesting.
Seeing as oil is now around $70 a barrel, they can refill it for a profit.
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We're not going to get a soft landing. They're going to push unemployment up to 6-8% to accomplish their policy goals of containing wage inflation and breaking the back of unionization drives (probably closer to 8% after something like CMBS detonates in about a year or so). That wage inflation in lower paying jobs is actually what concerns policymakers. Talk about a "soft landing" is very 2006-ish.
What evidence is there for this?
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If you're waiting for undisputable hard evidence of any macroeconomic theory, you'll be waiting a long time. The global economy is constantly changing and evolving and nations interact and trade in different ways over time. I have no faith in central banks to engineer a perfect landing, that's not the argument, it's simply that the concept of "deflation = bad" is not necessarily a universal truth.
So you have no evidence or reasoning whatsoever, just an analogy involving a car and vibes. That macroeconomics is difficult is no reason to just start doing random shit. I'm not asking for "indisputable hard evidence", but definitely something more than ~vibes~.
But we aren't in normal economic times. We're coming off (or, at 7+%, still experiencing) a period of ultra-high inflation (for the US) where prices seem to be rising out of control, where credit card debt is increasing rapidly. If prices were to fall, say 2% in 2023, I think that would be preferable for almost every consumer than prices continuing to rise even further. And the idea that the economy would grind to a halt and sink into recession as people delay purchases hoping for another 1% drop in prices, is pretty absurd.
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Actually, consumers very much do delay purchases, especially of big ticket items like white goods, cars, and houses in deflationary regimes, just as in periods of hyperinflation they do the opposite. This is easy to look up as there are many examples through history (especially of the latter — Brazil is an excellent and frightening example). Groceries, sure, but then as a consumer you are still impacted because suppl…
It’s not the same situation, but most video games I will wait a year or two to purchase. $70 day one, or $20 on Black Friday a year from now with all the DLC included?
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It’s not the same situation, but most video games I will wait a year or two to purchase. $70 day one, or $20 on Black Friday a year from now with all the DLC included?
It's extremely rare for inflation/deflation to reach double-digits. Would you actually wait if the price a year from now was $67 (and no extra content)?
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Seeing as oil is now around $70 a barrel, they can refill it for a profit.
what do you mean “profit”? The prices won’t stay suppressed once the SPR drain stops, OPEC has no interest in keeping prices low and the current admin has been cutting US output.