CNN: “China’s deflation problems get worse”
Oh yeah, cheaper stuff is such a “problem”. I’m sure glad we don’t have that problem here, so glad we have a healthy inflation instead. I love it when i can buy less stuff than last year for the same money. But hey, the stock market is doing great, right?
Fortune/Bloomberg: “China’s struggles with supply glut threaten to extend deflation”
Oh no, China produces too much stuff! They are suffering from “supply glut”! Almost sounds like some terrible disease! How will they ever cope with an abundance of cheap goods? Doesn’t the Chinese government understand that they are taking away their people’s right to scarcity?
Reuters: “China’s deflationary pressures deepen in February”
It’s been a while since i got my degree in physics but from what i can recall usually “pressure” leads to inflation not deflation. Deflation sounds like it’s taking financial pressure off of people. But what do i know, i’m not one of these fancy economists who understand why higher prices is a good thing.
Some rag founded by the Prince of Liechtenstein (yes the “country” so small you need a magnifying glass to find it on the map): “China trapped in a cycle of deflation”
Maybe i’m not understanding how money works, but personally i’d love to be “trapped” in a cycle of the stuff i buy getting less and less expensive every year. Thank you, person writing for the “prince” of a village pretending to be a country, for enlightening me about how that is actually a bad thing.
If they were to admit that deflation can have benefits, the people in their (the newspapers audience) countries would see it in a postive light which they cannot allow for obvious reasons
At one point competition dropping down commodity prices was a pro-market talking point lol, but china bad i guess.
My point exactly. This is literally an old capitalist argument that was used to justify why free market competition is good. But that was the old capitalist dogma. The new dogma is all about why monopoly and rents are good.
No, you don’t get it. People should have FREEDOM™, but they also shouldn’t have FREEDOM™ to buy basic necessities!
Here’s the thing, even if we allow for a capitalist paradigm in which what matters are profits and not the improvement of people’s lives, falling prices is still not necessarily a bad thing. If you make such an abundance of goods at such low production costs that you can afford to lower prices, you will sell more and you will make more profits while doing so than if you had not lowered your prices.
There seems to be this strange inability of economists to conceive of prices being driven by supply and not by demand. It seems all they talk about is demand and how prices are too low because consumption is too low.
But if you have ever seen footage from China you will know there is no shortage of consumption in China. They are a very commerce focused society, there are all kinds of goods being sold literally everywhere! Small shops selling everything you can imagine on every street and every corner. Consumption is not lacking at all in China. It’s just that the West has forgotten what it’s like to actually produce stuff on a large scale.
If you want to talk about a bleak situation with low consumption look no further than Europe. And it’s not because we’re so frugal and modest but because we literally can’t afford shit anymore.
All around me i see people spend most of their money on costs of living like rent and food. Basic necessities have gotten absurdly expensive while wages have stagnated, and so many shops are closing, industries are moving away, jobs are being lost… We’re not even building anything anymore, we can barely keep up with upkeep of existing infrastructure, the German Autobahn is a permanent construction site these days and the railways are a disaster.
Deflation is problematic as business and income drop too, but not as bad as inflation, especially in China where safe net for ultra poor is not as bad as us.
I don’t agree that it necessarily follows that deflation leads to a drop in business/incomes. You can compensate for lower prices by just selling a higher volume of goods. And if you are also reducing costs of production at the same time (scaling up mass production, increasing productivity through automation) then you will even come out with a net increase in profits.
Of course at some point the market will be saturated, demand isn’t infinite, but it doesn’t need to be. You can invest in producing something new for which the market isn’t yet saturated.
The bigger underlying problem here is that we are just accepting to operate in this capitalist paradigm of chasing infinite growth, which is neither necessary nor possible. But that’s a whole other discussion…
As i have just argued, even in this capitalist framework where everything revolves around profitability, deflation is not necessarily a bad thing if it is driven by an abundance of productive capacity. In fact it’s exactly what should happen as technological and industrial capabilities advance. What is the point of an economy if not to maximize the availability and affordability of goods and services for as many people as possible?
