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NZT48

(Economic) deflation is a good thing.

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To be fair, deflation happens in some areas because of efficiencies. Think what computers used to cost. 

 

But on the whole you can't just get rid of employees ad infinitum and have them all scrabble to start businesses that try to get a portion of an ever shrinking pie. You end up with a system that is less beneficial to people after all. 

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9 minutes ago, fliptopia said:

To be fair, deflation happens in some areas because of efficiencies. Think what computers used to cost. 

 

But on the whole you can't just get rid of employees ad infinitum and have them all scrabble to start businesses that try to get a portion of an ever shrinking pie. You end up with a system that is less beneficial to people after all. 

 

In short, inflation indicates more money in economy and more stuff bought. Deflation - less money and less stuff bought.

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1 hour ago, SquallStrife said:

When a person is laid off, or made redundant, that job no longer exists. There is now one less job in the pool of jobs available to the same amount of people. Dead simple.

But that person can be an entrepreneur or find work in another growing business.

 

1 hour ago, SquallStrife said:

Economic inflation is an indicator of growing productivity.

I disagree. Why do you think so? Economic inflation is an indicator of monetary inflation.

 

 

@Jeruselem: I found it difficult to get my head around what you said. Why would production costs dropping mean people get pay cuts or are retrenched? It seems to me the problems you are describing are because of recession, not deflation. Depression is not necessarily a precursor to deflation.

 

36 minutes ago, Jeruselem said:

In short, inflation indicates more money in economy and more stuff bought. Deflation - less money and less stuff bought.

That might be true but that doesn't mean inflation is better than deflation. Monetary inflation drives economic inflation and it benefits those who get to use the new money first at the expense of the rest.

 

 

@fliptopia: What is the "pie" and why is it "ever shrinking"?

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The pie is the money that people are willing to spend. Where the cost of living rises faster than wage growth you get shrinkage of the pie as there is less left over for house holds to spend.

 

Even less again if you increase unemployment and have people earning less (except the big places that can afford robotics instead of staff). So shrinking pies in your deflation world. If you lay off 100 staff and they've got to fight for your 10% discount due to automation, they are getting 0.1% each. Assuming you do actually pass on savings.

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I such situations of hard times that bring about these things like deflation, some things sell in larger quantities, like Alcohol....

 

Not hard to work out the follow on effect of that one.

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6 hours ago, NZT48 said:

It's a thread about deflation, not horrible economic policies.


Also the Earth is Flat.

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3 hours ago, Jeruselem said:

So that diagram didn't get through to you why then NZT48?

Why what? "Why would production costs dropping mean people get pay cuts or are retrenched?"?

 

 

38 minutes ago, fliptopia said:

The pie is the money that people are willing to spend. Where the cost of living rises faster than wage growth you get shrinkage of the pie as there is less left over for house holds to spend.

 

Even less again if you increase unemployment and have people earning less (except the big places that can afford robotics instead of staff). So shrinking pies in your deflation world. If you lay off 100 staff and they've got to fight for your 10% discount due to automation, they are getting 0.1% each. Assuming you do actually pass on savings.

Why would the cost of living rise faster than wage growth? Deflation means the cost of living goes down.

 

I don't know what you are on about.

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8 minutes ago, NZT48 said:

 

Why would the cost of living rise faster than wage growth? Deflation means the cost of living goes down.

 

I don't know what you are on about.

 

I'm explaining why the pie is already getting smaller and that your deflation model only makes things worse. 

11 minutes ago, NZT48 said:
3 hours ago, Jeruselem said:

So that diagram didn't get through to you why then NZT48?

Why what? "Why would production costs dropping mean people get pay cuts or are retrenched?"?

 

Why do production costs drop, keeping in mind that there's only so far that "efficiencies" can take you. 

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6 hours ago, fliptopia said:

To be fair, deflation happens in some areas because of efficiencies. Think what computers used to cost. 

 

But on the whole you can't just get rid of employees ad infinitum and have them all scrabble to start businesses that try to get a portion of an ever shrinking pie. You end up with a system that is less beneficial to people after all. 

Add to it that most small businesses fail within the first two or three years (some the first year), It's far from as easy as a lot of people think it is.

 

For some rose coloured glasses are nice to look through, but never show the world as it really is.

Edited by datafast69

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20 hours ago, fliptopia said:

The pie is the money that people are willing to spend.

Why would "the money that people are willing to spend" be getting smaller? It is not like wealth gets destroyed much. Are you suggesting there are a minority who are accumulating money and not spending it? I think the answer is free-market capitalism, not inflation. In free-market capitalism it is easier for people to get wealthy. With inflation it is those who get the new money first who benefit at the expense of the rest.

 

 

19 hours ago, Leonid said:

Also the Earth is Flat.

What "horrible economic policies" is this thread about?

 

 

19 hours ago, fliptopia said:

Why do production costs drop, keeping in mind that there's only so far that "efficiencies" can take you. 

Because of new inventions and population growth and an increase in economic freedom.

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The nature of markets is expanding and shrinking demand, so yes demand for a product can reduce ... in some cases to zero. So that "pie" is dependent on the demand and the amount of money people are willing to spend for the product.

Edited by Jeruselem

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On 11/5/2019 at 10:57 AM, NZT48 said:

But that person can be an entrepreneur or find work in another growing business.

 

*facepalm*

 

In economic stagnation and deflation, there isn't "another growing business", but there is a growing population of unemployed fighting for a shrinking number of jobs.

 

When there is rising unemployment, people don't have money to gamble on entrepreneurial ventures. Banks are averse to lending money to new businesses, when the existing businesses are already experiencing losses.

 

2 hours ago, NZT48 said:

I think the answer is free-market capitalism, not inflation. In free-market capitalism it is easier for people to get wealthy. With inflation it is those who get the new money first who benefit at the expense of the rest.

 

Nothing in this sentence makes any sense, and at this point, you're just spilling word soup all over the place.

 

You won't be taken more seriously, just because you litter your posts with keywords, much less as you proceed to demonstrate nothing more than a passing understanding of the meanings of the words you're using.

 

Edited by SquallStrife
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On 11/6/2019 at 12:09 PM, Jeruselem said:

The nature of markets is expanding and shrinking demand, so yes demand for a product can reduce ... in some cases to zero. So that "pie" is dependent on the demand and the amount of money people are willing to spend for the product. You might be the more efficient manufacturer of FAX machines but you'd go broke because no one needs them anymore.

I don't think so. If people spend less money on FAX machines then they have more money to spend on other things.

 

 

On 11/6/2019 at 1:58 PM, SquallStrife said:

In economic stagnation and deflation, there isn't "another growing business", but there is a growing population of unemployed fighting for a shrinking number of jobs.

Do you mean "in a situation where there is stagnation and deflation" or are you talking about both stagnation and deflation together?

Edited by NZT48

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2 minutes ago, NZT48 said:

Do you mean "in a situation where there is stagnation and deflation" or are you talking about both stagnation and deflation together?

 

I don't know quite what you're asking there, why "or"? I'm talking about them together, but they are separate things.

 

Stagnation is the neutral state between growth and recession, deflation is the opposite of inflation. They are related, in that the former typically results in the latter, but they are not the same.

 

 

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Sorry; my bad. I didn't communicate what I wanted to. I should have said something like this:

 

Do you mean "in a situation where there is stagnation and deflation" or are you talking about stagnation and deflation individually?

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17 hours ago, NZT48 said:

Why would "the money that people are willing to spend" be getting smaller? It is not like wealth gets destroyed much. Are you suggesting there are a minority who are accumulating money and not spending it? I think the answer is free-market capitalism, not inflation. In free-market capitalism it is easier for people to get wealthy. With inflation it is those who get the new money first who benefit at the expense of the rest.

In contracting conditions consumer confidence goes down, they spend less, ergo there is less money to go round so again people hang onto their money in an ever downward spiral. 

We live in a situation where housing is unlikely to meaningfully go down and has risen massively compared to average wage growth meaning all that disposable income is already torn out of the system. You aren't likely to deflate that housing market and even if you did then all those property owners taking massive hits on the money they have spent on homes then retract their spending. 

 

17 hours ago, NZT48 said:

Because of new inventions and population growth and an increase in economic freedom.

 

Are these inventions at the expense of workers? 

 

The only way for deflation to work happily  would be simultaneous deflation across all nations and then everyone would essentially be in the same spot. Also, when you have a majority of people all with more money to spend you basically start inflation again as people realise there is more money to be made so the cycle just starts again. It's what you get with more economic freedom. 

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All this comes back to our economies depending on constant growth, right? 

 

Seems a little... unsustainable. Reminiscent of, I dunno... a pyramid scheme. 

 

Heaven forfend we contemplate alternatives. For some reason, certain doctrinaire fanatics would like you to equate that with... gulags? Lol. GTFO

 

 

Edited by Kimmo
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1 minute ago, Kimmo said:

All this cones back to our economies depending on constant growth, right? 

 

Seems a little... unsustainable. Reminiscent of, I dunno... a pyramid scheme.

 

I have argued that for a very long time.  Taking it up with my lecturers generally resulted in the sort of blank stare more appropriate for avowing flat Earth belief.

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Economics professors?

 

Hardly surprising, given that economics was the first bit of academia to be colonised, gutted, and replaced with propaganda, half a century ago. 

 

Then Piketty comes along and bitchslaps the whole field with a mountain of actual real world data, making an utter mockery of the stupid games with spherical cows they've been playing, and... nobody seems to notice. 

 

You can't wake someone who's pretending to be asleep. 

 

 

Edited by Kimmo

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23 minutes ago, Kimmo said:

You can't wake someone who's pretending to be asleep.

 

I don't think they're pretending.  I also don't think 'asleep' covers it - comatose might be closer.

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Depends how much is riding on the status quo. In academic circles, unfortunately that can be quite a bit, no? 

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4 hours ago, Kimmo said:

Depends how much is riding on the status quo. In academic circles, unfortunately that can be quite a bit, no? 

 

Well, yes and no.  Mostly yes.  But if you're charismatic and forceful in your opposition, you can make quite a name for yourself in some fields.  Economics is one of the better ones that way; nobody's going to be teaching your books if you're a radical, but you'll get speaking gigs the world over.

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Hmm,

 

 Comatose is a good description.

 

I ran into the "Economists-on-tour" phenomenon many years ago. Every time Australia in the 70s to early 80s had a blip these learned Americans would appear, telling u what we had done wrong.

 

Thankfully we did not take too much notice.

 

He was a lot less than perfect but Paul Keating saw it as the crock it was and whilst he had the controls he steered us back to a robust economy that rode out the next crisis quite well.

 

Not too many Americans turned up that time...

 

Unfortunately those who do not learn from history are doomed to repeat it.

 

BTW, i utterly agree, a constantly expanding economy is a fiction that eventually burns many fingers in the inevitable correction.

 

I did try to tell a boss back in the pre-dot crash to get out, he didn't and only his family saved him.

 

We need a new deal, this round of cards is getting old.

 

Cheers

 

 

 

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3 hours ago, Cybes said:

Economics is one of the better ones that way; nobody's going to be teaching your books if you're a radical, but you'll get speaking gigs the world over.

 

There's the rub - in economics, it's radical to base your work on reality rather than models tailored to support a foregone conclusion. Kinda invites contempt for the orthodoxy, there

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