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How could we possibly have an economy that’s not based on constant growth? It’s absolutely inconceivable! I mean, what would we even do if we weren’t endlessly chasing that sweet, sweet GDP growth? Imagine a world where we actually meet everyone’s needs, live sustainably, and focus on well-being instead of mindless expansion—utter madness! Clearly, the only way to be “healthy” is to keep growing forever on a finite planet.
But that level of stability would mean no one could make themselves richer!
The thing is: nature will bring the stability anyway. It just won’t include us. Sucks that we all have to die because the greediest among us cannot pull head from ass.
I don’t think it’s given humans will go extinct in the foreseeable future, rather the capitalist system will collapse and create room for a more sane one.
I don’t think you necessarily need GDP growth to have a healthy small amount of inflation. Inflation has more to do with monetary supply than GDP growth.
I’d argue that inflation is best viewed as a result of decisions made by business owners rather than a passive outcome of market forces. Businesses increase prices to boost profit margins, often beyond what is necessary to cover costs. While external conditions like monetary policy or wage increases may create an environment conducive to price hikes, the decision to raise prices ultimately lies with businesses.
Socialists of all types have been saying this for ages and explaining all the ways you could do it without succumbing to a deflationary spiral, but I’m sure libs will take this as evidence that Xi doesn’t understand econ 101 and that he’s ruining China.
Won’t deflation increase the value of money, and so enrich those with accumulated money more than those barely scraping by?
Deflation is not a problem in the Chinese case because of their unique circumstances. Chinese households have very high savings so they are actually better off from deflation. They also have an ultra high investment rate which is set by the government. So they don’t need to worry about a deflationary spiral.
For other countries deflation will have different effects which may largely be negative (although that still depends on why deflation is happening). However, the fears of deflationary spirals are … completely overblown. Not only does deflation require abnormal circumstances, but fixing it is extremely easy even for capitalist governments.
That is an effect, it also increases the relative value of debts which isn’t great, but the negative impacts of those is less than the potential positive impact of reducing the relative cost of living. Really what you’ve got to focus on if you’re a government trying to manage deflation is a) capital flight and b) wage reduction, because the biggest negatives are seen if investment gets pulled out of the economy and the positives aren’t realized if people’s wages don’t stay the same.
He’s dead right.
Humanist economics has a central pillar: abundance. Profit maximization requires scarcity, and geopolitical or other suppression of competition. In addition, higher interest rates prevent abundance, and funding of supply increases of farming production, and increase housing costs, insurance greed, and so affordability of other stuff.
The war on Russia led to higher interest rates in order to ration oil use, and employment, again limiting production.
Deflation is not even bad for the rich. Lower interest rates stabilize housing prices, and reduce government deficits, and improve financial asset values. Wages don’t generally go down, and they definitely don’t go down under policies of abundance.
Abundance means more work is available. Prices are lower letting workers and others afford more stuff leading to more abundance. UBI is the most important anti-slavery (also humanist) and prosperity (also humanist) policy alternative. It is inflationary, but makes high paying work that outpaces inflation easy to find.
The key about inflation vs deflation is how balanced income growth is relative to inflation. If it is only oligarchy making income/wealth gains, then you should address your complaints to that structure instead of the inflation.
The problem with deflation is that people end up hoarding all their cash because you get a return on it without doing anything with it.
So large swathes of money start getting taken off the playing field. Investment dries up, growth slows, people get laid off, and this cycle continues, one thing causing the next, causing the next in a circle. It’s one of the most destructive forces possible to an economy.
That’s why the central banks strive for around 2%. It’s enough to force people with cash lying around to invest it in something useful which will create jobs, etc, but not so high that it will make everyone panic and run the banks.
On the flip side, we’ve seen with inflation that just amazing amounts of debt have been created, with consumers massively underwater spending way beyond their means, leading to things like house values blowing up completely unsustainably.
So inflation is not automatically better, it’s just a different kind of bad.
Economists would call this leveraged economic growth and not consider it a bad thing.
It’s a fair point, and typical thinking, but wrong. Deflation is better than inflation.
First, in general asset inflation vs goods inflation is usually different. Then for goods inflation, there is no good measure. Substitute goods exist.
Asset inflation definitely improves lives of the rich. Your “hoarding scare” can happen when savings/bond rates are higher than inflation. That is the genuine hoarding motivation. Lower interest rates supported by deflation supports more borrowing for more production/housing, with lower financing costs passed on to consumers. Either way, all money in the banking/financial system is hoarded money, and fractional reserve lends more the more demand for money there is. Deflation is better than inflation for this.
For goods, electronics and now EVs are deflationary. Your phone from 2008 cost the same as one from this year while having 100x less power/apps/value. While it can make sense to wait on tech/value improvements, competition/innovation creates work, and the deflation is the cause of that innovation, and there is a replacement cycle. Energy, food, clothing deflation would allow for higher consumption and also more work, though rarely would there be expectation of continued sustained deflation. Deflation is always technology or imported/slave labour costs. Never domestic wage reductions, unless slavery pressures can be manifested. Tariffs can stop it though.
Any economic competition creates a deflationary pressure. Deflation can be renamed value enhancement. When you favour inflation over deflation you are saying, “scarcity good, competition bad, innovation bad”
This excuse only affects fractional reserve banking and investments. It does nothing to non capital focused economies, and China’s economy is less than 40% capital.
That’s a pretty important caveat. I would take it one step further to say that it only matters in non-communist governments. Yes, maybe China can pull it off. But even losing a large chunk of 40% of the economy will be pretty bad and they’d have to switch to something pretty close to fully communist pretty quick to pick up the slack.
Which is the plan anyway, especially after the failure of allowing privatized luxury housing development.
But more importantly, a country that doesn’t privatize any of the essentials has nothing to fear from the collapse of private markets; everyone will still be housed, fed, and cared for.
Basic utilities like electricity is privatized in most of the US. Are we cooked when inevitable degrowth occurs?
Well yeah, line must go up, electric company will make line go up or they’ll go bankrupt.
Im no economist but with negative inflation it drives consumers to put off that next purchase.
Why buy the car you have been saving for, or put a bid on a house, upgrade your TV or get replacement running shoes if prices are staying the same or potentially going down? A way to make sure that people spend now and dont put it off is that they know the longer they wait the higher chance that the shoes are going to be $5 more in a months time or two.
If people arent spending then conversely people arent selling, building, labouring, etc and then everything grinds to a halt. People get laid off, people cant pay rent or mortgages, things go to shit.At least this is the way i understand it, and like i said im no expert.
Cars and TVs are already deflationary - the same money will buy a better car or TV if you wait a year or two (or just wait a year and buy used)
Consumers living paycheck to paycheck don’t have the time or energy to pay attention to inflation. If they can afford something they need then they buy it. If you need gas for your car then you buy it regardless of the price.
nooooo we need endless economic growth forever and ever
Even more than most, China’s current reality is based entirely on explosive growth, which they’ve had plenty of in the last 20 years.
While consumers can benefit from falling prices, persistent deflation can also lead to a downward spiral for spending and investment.
This is not a worry for China because they have maintained an absolutely insane rate of investment and growth for decades now.
According to this data, while investment as a percentage of GDP has fallen off during Xi’s term, it still remains well above historical standards and near the top by world standards. Of all the major economies on earth, China is the only one with investment as a percentage of GDP above 40%. Even economies many times smaller and less developed like India still have a lower investment rate than the Chinese.
Furthermore, if you look at the household expenditure per capita, the post covid times still have a much higher level of household consumption than 2019. Not only that, but investment spending is mutually exclusive with consumer spending. Complaining both that China has insufficient investment and consumption is interesting to say the least …
The State Council Information Office, which is charged with fielding questions about China’s leaders, didn’t respond to a request for comment and referred the Journal‘s questions to other agencies that didn’t reply to its queries.
Lol
While U.S. consumers have been frustrated with years of elevated inflation, the economy has also been robust, unemployment remains low, and the rate of price growth has slowed substantially since hitting a high in 2022.
If the American economy is doing so good, how did Trump manage a clean sweep?
the rate of price growth has slowed substantially since hitting a high in 2022.
If the American economy is doing so good, how did Trump manage a clean sweep?
Right in that quote, the best thing they can say about our economy is not that it’s getting better, but that it’s not getting worse as quickly as it was two years ago.
Now he’s just dabbing on us.
I bet he never has to check his bank balance before he goes to the grocery store.
Another thing he has in common with over a billion Chinese citizens
To be sure, consumers would benefit from lower-priced goods. But persistent economy-wide deflation can also trigger a vicious cycle of lower spending and investment, leading to even weaker growth and higher unemployment.
Unless countered by increased Government spending, they have implemented some stimulus measures but I hope they go for more.
Central Government can always unconditionally invest and spend without caring about turning money into more money.
Its why real wages and unemployment are better measures than solely looking at prices.
Capitalist magazines can’t imagine Government doing stuff other than weapons for genocide or bank bailouts.
The main reason global markets aren’t absorbing the demand is sanction on chinese produced goods. But anyhow it will be interesting to see how the renewable energy boom picks up steam. Jupiter 1 hydrogen gas generator engine is a pretty huge milestone.
Jupiter 1 hydrogen gas generator engine
https://newatlas.com/energy/worlds-largest-pure-hydrogen-electrical-generator/
at 15kg per kw, this is 300x less efficient than a fuel cell for just electricity output. Distributed fuel cells can use waste heat for domestic hot water needs.
A better use of combusting H2 for electrical power generation, is changing the input valves on electrical generating NG turbines. That is just 2x less efficient than a fuel cell.
Fuck sanctions.
If domestic producers want domestic buyers, they should lower their prices to be competitive and take less profit as a result. But they won’t do that if they can have the government step in to artificially raise the prices of competitors’ products.
If they can’t do this while paying employees respectable wages, then it shouldn’t be up to the government to step in and bail them out.
We’re literally letting the government force us to have worse deals so people richer than us can be even richer at our expense.
Deflation is a great thing.
The working class has been conditioned to think it’s “bad” and inflation is “inevitable” because inflation is how the ruling class recoups any gains the working class has made, with interest.
Personally, I think it goes a bit deeper than this. Insecure people always want to feel they “know” everything, so they will often overreach and make claims about something they don’t understand just to look smart and fit in. For example, always using the word “consumer” instead of “customer.” They want to sound smart, like they went to school and learned about consumers, but they don’t realize how they’re acting without thinking. It’s all a show to avoid admitting they don’t really know what they’re talking about.
Inflation is the same. Since it’s almost guaranteed to happen and it benefits the ruling class, the average worker has been conditioned to see it as beneficial. They are praised for going along with the narrative that inflation is necessary and it makes them “feel smart” even if they are incorrect.
Saying “communism doesn’t work” is another example.
aren’t you doing the thing you are criticizing? because to me you are trying to sound like you know everything as well.
Yes that comment is 5% saying something and 95% shitting on unnamed people in an attempt to claim elite knowledge.
Nah. I’m not trying to fit in, which you seem to have conveniently ignored.
I could be wrong, but the evidence points to inflation being a result of the working class having more spending power. It means that no matter what gains the working class makes, the ruling class will take them back with interest.
If you think this is incorrect, feel free to say why.
You’re making it sound like wage growth always perfectly balances with inflation. It doesn’t. Regular people get fucked when wage growth falls behind price growth, but they benefit if wage growth outpaces inflation, which it sometimes does. This means that inflation is not some ever present gotcha that always keeps the people down. It’s one factor in the equation.
On another point, can you explain why you think inflation benefits the ruling class, and deflation benefits the working class? Because you never explained this which gives the appearance that it’s based entirely on “when prices go up, ruling class win,” which is not always the case.
you should go to China and ask average Chinese people about how they feel about their “cheap groceries”.
wealth inequality is a huge problem, and attribute it to inflation is naive. the rich has power in a capitalistic society, they will win no matter we are in an inflationary or deflationary economy. to think deflation will be good for the working people is very naive.
Wealth inequality exists in China, but is in most areas declining or rising at a slower rate than peer countries. The PRC relatively recently completed a decade-long poverty eradication campaign, to great results. China isn’t a wonderland, but it’s improving far more rapidly than practically anywhere else currently.
sure, but that is because of rigorous government policies that came out of a herculean effort to eradicate poverty, not because of deflation like the comment i was replying to is trying to claim. if you look like China’s inflation rate, it hovered ~2% for the past decade which is comparable to the US.
“In most areas” is a very big cheat on this data though. With a great deal of wealth concentrated in the 1%, you can’t just leave out the 1% as an outlier and say that aside from them, things are pretty equal.
China’s wealth inequality overall has skyrocketed and is staggering, both because of its growing number of explosively wealthy, and the utter impoverishment of a large part of the population.
You’re at least a decade out of date, extreme poverty has been eradicated even according to the world bank, and I am not excluding the 1% here. Working class salaries have risen dramatically, the disparity has risen but the real conditions for the overwhelming majority of people have dramatically improved. Disparity is a problem, yes, but it isn’t a simple one, I recommend the essay China Has Billionaires.
Overall, though, your notions are heavily outdated and data reflects that.
While it’s good data to see, I’m always suspicious of celebrating the fact that people have gone from earning $2 per day to $5 per day as “eradicating poverty.”
The real (inflation-adjusted) incomes of the poorest half of the Chinese population increased by more than four hundred percent from 1978 to 2015, while real incomes of the poorest half of the US population actually declined during the same time period. https://www.nber.org/system/files/working_papers/w23119/w23119.pdf
From 1978 to 2000, the number of people in China living on under $1/day fell by 300 million, reversing a global trend of rising poverty that had lasted half a century (i.e. if China were excluded, the world’s total poverty population would have risen) https://www.semanticscholar.org/paper/China’s-Economic-Growth-and-Poverty-Reduction-Angang-Linlin/c883fc7496aa1b920b05dc2546b880f54b9c77a4
From 2010 to 2019 (the most recent period for which uninterrupted data is available), the income of the poorest 20% in China increased even as a share of total income. https://data.worldbank.org/indicator/SI.DST.FRST.20?end=2019&%3Blocations=CN&%3Bstart=2008
By the end of 2020, extreme poverty, defined as living on under a threshold of around $2 per day, had been eliminated in China. According to the World Bank, the Chinese government had spent $700 billion on poverty alleviation since 2014. https://www.nytimes.com/2020/12/31/world/asia/china-poverty-xi-jinping.html
In 2024, Chinese households hit another record high https://www.wsj.com/livecoverage/stock-market-today-dow-jones-bank-earnings-01-12-2024/card/chinese-household-savings-hit-another-record-high-xqyky00IsIe357rtJb4j
These are not things that happen in societies where the rich have power. The only thing naive here is your understanding of China. Oh and before you start bleating that China has billionaires, I encourage you to read this https://redsails.org/china-has-billionaires/
you should go to China and ask average Chinese people about how they feel about their “cheap groceries”.
Have you done this? What did they say?
wealth inequality is a huge problem, and attribute it to inflation is naive. the rich has power in a capitalistic society, they will win no matter we are in an inflationary or deflationary economy. to think deflation will be good for the working people is very naive.
You haven’t disproved my point about inflation being a tool for the ruling class to recoup the gains of the working class, which it is. You’ve just said “they will win no matter what and deflation is not good for working people” without explaining why.
Can you elaborate on why deflation is bad? Do you think inflation isn’t a result of workers having more money to spend and businesses raising prices to maximize profit?
I have. It was rent, not groceries, but same conversation. Their feedback was consistent. “In the past, the government covered this entirely, but now we have to pay a part.”
I asked how that works when they are employed by the government, technically. The government is how they earn money to pay for the thing the government used to pay for. How does this make sense?
Their answer: “In the past, the government covered this entirely, but now we have to pay a part.”
Do you think everyone in China works for the government?
And getting the same answer sounds more like a language issue or brush off than anything significant.
