Deflation means that the value of the money people owe would be increasing.
Not a concern for the university socialists whose parent paid for their university from an ample college fund. But for working class people that owe money on a car or a house this would be bad.
Imagine you took out a mortgage, and the amount you had to pay went up each month. That’s what deflation means. This country runs because we have inflation; you can take out a loan, and with fixed payments (such as a fixed-rate mortgage), you effective payments go down each year, because the dollars you are using to pay your mortgage off have less purchasing power. If you manage to get lucky and had a 2% fixed APR mortgage when inflation hit 8%, then the bank is losing money on your mortgage. But it you have a 3% mortgage, and there’s no inflation, or 1% deflation, then you’re underwater very, very fast.
You need inflation. Period. The monetary supply needs to, at a minimum, increase with the population. If it doesn’t, then you’re intensifying the effect of concentrating wealth.
Raises usually lag behind inflation, but generally keep pace with it, more or less. If the economy is increasing in size, inflation is going up, and real wages are keeping pace, you get stagflation, which is pretty much where we are now. Wages have broadly gone up, but so have prices. This is especially a problem because the labor market is very tight right now; it’s very abnormal (broadly speaking) to see a very, very tight labor market, and also see real wages not rising. In a tight labor market, you should see costs of labor rising faster than prices as businesses compete for workers. But that’s not what we’re seeing; instead, we’re seeing corporations ensuring that they retain exactly the same profit margins.
OTOH, with deflation, your wages do get cut, because you get laid off, and cheaper labor is hired to take your place. Deflation is almost always coupled with higher unemployment.
I believe that most people have largely been seeing their wages keeping pace. It’s the disconnect between seeing their wages rise and not seeing any increase in purchasing power that’s leading people to think that the economy is bad. But–again–this is stagflation. With a combination of factors, it feels really bad, even though most people are not objectively worse off than they were. And, compared to the height of the pandemic (which was all Trump!), the vast majority of people are doing far, far better than they were. What I mean by people aren’t worse off is that you aren’t seeing a sharp rise in indicators of economic distress, like people defaulting on mortgages or car loans. But–again–it feels bad because it’s easy to remember when a box of cereal was $7 instead of $10.
When you talk about wages v. productivity, then no, wages don’t even come close to tracking.
Love that you totally ignore the wages v. income. Ha.
You’re talking about bad financial decisions not economic distress
I would hardly call getting a car a “bad financial decision”, given that cars are a practical necessity in the US. Fundamentally, people right now are doing better than they were four years ago. The data backs this up.
The housing shortage traces back almost directly to the pandemic. The first house I bought was in 2013-ish, and houses were cheap because enormous numbers of people had defaulted on mortgages after the 2008 crash. There was also an enormous supply as a result. Construction halted during the pandemic as building supplies dried up, and unemployment skyrocketed. Now that wages have been rising, you have too many people bidding on too few houses, which drives up costs. Once–if–housing supply catches up to demand, you can expect to see prices fall again. Anecdotally, there was a lot of farmland around me that had been bulldozed shortly before the pandemic, and then it just sat, with pretty signs touting the development that was going to go in. It’s only been in the past four years that they’ve started building again, and they’re almost full now.
You’re talking about the finance bro shit not the working class shit.
Hate to state the obvious, but these things are, in fact, linked. The finance bros don’t exist in a vacuum where labor magically happens that they can skim profits from.
Since working class people typically pay their debts off an income it wouldn’t be much of a problem.
If they have to take a pay cut because “prices are lower you don’t need to be paid as much” it would be a a problem. Also the price of houses go down. Congrats you owe more than your house is worth. You still gotta pay off that upside down mortgage tho!
because any inflation or deflation is means for an employer to trim the wages they pay.
Yup. But with the deflation you get the added bonus of the value of the money you owe increasing. Upside down mortgages, bankruptcy, foreclosures, people gotta find a new place to live, fun times for everyone!
See there’s a reason a slow and steady inflation is the norm. It’s super bad to have the money you owe increase in value. But a war in the part of the world where most of the grain is produced caused grocery prices to go up a lot and drove inflation way higher than normal. But inflation is under control now. But unfortunately the inflation that already happened can’t really be reversed. Get your boss to give you a raise, join a union if you have to. Unlike nearly every time in history when this kind of thing has happened there isn’t a recession following a bout of inflation, which is pretty much unheard of. Biden stuck the soft landing.
Also deflation increases the value of money for the wealthy. Why does the socialist crowd want deflation which increases the value of wealth for those who have it? Right, because they’re too busy cosplaying as socialists they don’t care enough about the real world economic effects on the working class to bother trying to understand how anything works.
Old Joe actually cares about the working class, he stuck the soft landing (the economic equivalent of landing on the moon) and is now pursuing trust busting. The socialist and MAGA crowd (basically the same kind of people) are all mad about it.
At least thats what I tell myself, because I refuse to believe that there are so many people here stubbornly refusing to believe experts who have studied their fields for years. Just because I don’t understand something doesn’t mean that nobody understands it. I’m constantly amazed by people who make advances in areasthat I have little experience in personally, but I know enough about the scientific community to agree that these contributions should be lauded.
Nevertheless, expect to be brigaded by downvotes for trying to bring logic into the discussion.
The socialist and MAGA crowd (basically the same kind of people)
What even is this? Horseshoe theory brainworms? Either you are with us or you are with the terrorists? You think people who want to end capitalism are the same as the people who want to maintain it?
I’m fairly certain the hexbear instance is a Chinese troll farm.
Anyone who isn’t either a liberal or MAGA must be a paid shill of a government the Atlantic Council doesn’t like this week. Not other possibility exists, thanks to two red scares and two cold wars.
I remember conversations with them would come to an instant halt by simply linking to the wikipedia entry on the Tienanmen Square massacre.
Imagine thinking that Russia or China would focus on manipulating opinions of a tiny community with a few thousand users many of whom don’t even live in US. It’s absolutely incredible to see how any time liberals step out of their echo chambers, they refuse to even contemplate the fact that people might have different ideas from their own.
Deflation means that the value of the money people owe would be increasing.
Not a concern for the university socialists whose parent paid for their university from an ample college fund. But for working class people that owe money on a car or a house this would be bad.
deleted by creator
That’s really not correct.
Imagine you took out a mortgage, and the amount you had to pay went up each month. That’s what deflation means. This country runs because we have inflation; you can take out a loan, and with fixed payments (such as a fixed-rate mortgage), you effective payments go down each year, because the dollars you are using to pay your mortgage off have less purchasing power. If you manage to get lucky and had a 2% fixed APR mortgage when inflation hit 8%, then the bank is losing money on your mortgage. But it you have a 3% mortgage, and there’s no inflation, or 1% deflation, then you’re underwater very, very fast.
You need inflation. Period. The monetary supply needs to, at a minimum, increase with the population. If it doesn’t, then you’re intensifying the effect of concentrating wealth.
deleted by creator
Raises usually lag behind inflation, but generally keep pace with it, more or less. If the economy is increasing in size, inflation is going up, and real wages are keeping pace, you get stagflation, which is pretty much where we are now. Wages have broadly gone up, but so have prices. This is especially a problem because the labor market is very tight right now; it’s very abnormal (broadly speaking) to see a very, very tight labor market, and also see real wages not rising. In a tight labor market, you should see costs of labor rising faster than prices as businesses compete for workers. But that’s not what we’re seeing; instead, we’re seeing corporations ensuring that they retain exactly the same profit margins.
OTOH, with deflation, your wages do get cut, because you get laid off, and cheaper labor is hired to take your place. Deflation is almost always coupled with higher unemployment.
deleted by creator
source
I believe that most people have largely been seeing their wages keeping pace. It’s the disconnect between seeing their wages rise and not seeing any increase in purchasing power that’s leading people to think that the economy is bad. But–again–this is stagflation. With a combination of factors, it feels really bad, even though most people are not objectively worse off than they were. And, compared to the height of the pandemic (which was all Trump!), the vast majority of people are doing far, far better than they were. What I mean by people aren’t worse off is that you aren’t seeing a sharp rise in indicators of economic distress, like people defaulting on mortgages or car loans. But–again–it feels bad because it’s easy to remember when a box of cereal was $7 instead of $10.
When you talk about wages v. productivity, then no, wages don’t even come close to tracking.
deleted by creator
Love that you totally ignore the wages v. income. Ha.
I would hardly call getting a car a “bad financial decision”, given that cars are a practical necessity in the US. Fundamentally, people right now are doing better than they were four years ago. The data backs this up.
The housing shortage traces back almost directly to the pandemic. The first house I bought was in 2013-ish, and houses were cheap because enormous numbers of people had defaulted on mortgages after the 2008 crash. There was also an enormous supply as a result. Construction halted during the pandemic as building supplies dried up, and unemployment skyrocketed. Now that wages have been rising, you have too many people bidding on too few houses, which drives up costs. Once–if–housing supply catches up to demand, you can expect to see prices fall again. Anecdotally, there was a lot of farmland around me that had been bulldozed shortly before the pandemic, and then it just sat, with pretty signs touting the development that was going to go in. It’s only been in the past four years that they’ve started building again, and they’re almost full now.
Hate to state the obvious, but these things are, in fact, linked. The finance bros don’t exist in a vacuum where labor magically happens that they can skim profits from.
If they have to take a pay cut because “prices are lower you don’t need to be paid as much” it would be a a problem. Also the price of houses go down. Congrats you owe more than your house is worth. You still gotta pay off that upside down mortgage tho!
Yup. But with the deflation you get the added bonus of the value of the money you owe increasing. Upside down mortgages, bankruptcy, foreclosures, people gotta find a new place to live, fun times for everyone!
See there’s a reason a slow and steady inflation is the norm. It’s super bad to have the money you owe increase in value. But a war in the part of the world where most of the grain is produced caused grocery prices to go up a lot and drove inflation way higher than normal. But inflation is under control now. But unfortunately the inflation that already happened can’t really be reversed. Get your boss to give you a raise, join a union if you have to. Unlike nearly every time in history when this kind of thing has happened there isn’t a recession following a bout of inflation, which is pretty much unheard of. Biden stuck the soft landing.
Also deflation increases the value of money for the wealthy. Why does the socialist crowd want deflation which increases the value of wealth for those who have it? Right, because they’re too busy cosplaying as socialists they don’t care enough about the real world economic effects on the working class to bother trying to understand how anything works.
Old Joe actually cares about the working class, he stuck the soft landing (the economic equivalent of landing on the moon) and is now pursuing trust busting. The socialist and MAGA crowd (basically the same kind of people) are all mad about it.
Unionize so your boss can’t do that.
I think Lemmy paints a difficult picture to decipher if we’re considerate of the broader voter base.
Tin Foil Hat time! We know that Russia and China, among others, have troll farms working across social media to try to shape the narrative. One of their stated goals is to increase divisiveness among westerners. Lemmy is such a small community that it would not take much effort for them to dominate the conversation here.
At least thats what I tell myself, because I refuse to believe that there are so many people here stubbornly refusing to believe experts who have studied their fields for years. Just because I don’t understand something doesn’t mean that nobody understands it. I’m constantly amazed by people who make advances in areas that I have little experience in personally, but I know enough about the scientific community to agree that these contributions should be lauded.
Nevertheless, expect to be brigaded by downvotes for trying to bring logic into the discussion.
Removed by mod
Insofar as you and @unconfirmedsourcesDOTgov@lemmy.sdf.org sound like dumbasses, it works.
What even is this? Horseshoe theory brainworms? Either you are with us or you are with the terrorists? You think people who want to end capitalism are the same as the people who want to maintain it?
Anyone who isn’t either a liberal or MAGA must be a paid shill of a government the Atlantic Council doesn’t like this week. Not other possibility exists, thanks to two red scares and two cold wars.
.
The Blue Anon conspiracy theories never seem to end. Just today the NYT has re-shifted the conspiracy from Russia to China.
look at the profile, it’s a literal NAFO troll
Imagine thinking that Russia or China would focus on manipulating opinions of a tiny community with a few thousand users many of whom don’t even live in US. It’s absolutely incredible to see how any time liberals step out of their echo chambers, they refuse to even contemplate the fact that people might have different ideas from their own.