Every morning i get to make this face as I read the "Associated Press" to see what drivel the upstream "news" source for the mayo empire has deemed fit to feed down to the masses, usually resulting in me making a face like this:
a few days ago we got this real gem
Who wouldn’t like prices to start falling? Careful what you wish for, economists say
hmm well that sounds foreboding! what could possibly be bad about falling prices?
Wouldn’t it be great if prices actually fell — what economists call deflation? Who wouldn’t want to fire up a time machine and return to the days before the economy rocketed out of the pandemic recession and sent prices soaring?
yes! i think it would be good! i would like to be able to afford food that isn't spaghetti!
Many economists caution, though, that consumers should be careful what they wish for.
why?!?
Mainly because falling prices tend to discourage consumers from spending. Why buy now, after all, if you can purchase what you want — cars, furniture, appliances, vacations — at a lower price later?
um.... oki. so like, i can still spend less money? oki?!?
businesses would face intense pressure to cut prices even more
oh the humanity!!!
It’s certainly true that Americans can make their paychecks go further when prices are falling. If food or gasoline prices were to tumble, households would surely find it less painful to afford groceries or their commutes to work
oh my goodness imagine if those selfish people could afford groceries and commuting to work!
who will think of the businesses?!?! omg
anyways, i've spit all my coffee out. I love me some lib economic takes in the morning. so silly, so fun, we're so doomed. what a broken ass system
rant over y'all thank you :3
The whole "consumers spend less" argument is so fucking idiotic. The consumption of items like food, energy and water cannot be delayed. Deflation for their prices will not impact consumer spending.
As for the consumption of durables, even if their consumption gets delayed, it cannot be delayed indefinitely. If people plan to buy TVs 1 year from now instead of today, then they will save money. If capitalists predict that people want to buy TVs 1 year from now, they will borrow this saved money from the banks and use it to boost TV production. Then 1 year from now, the exchange happens and everyone is happy. This is literally supposed to be how capitalism plans production. The very fact that economists are afraid of inflation shows that they don't have the slightest faith in the system to plan for the future.
The whole drama about inflation and spending money now exists purely because capitalism can only respond to immediate signals. Its ability to plan ahead is terrible (not as if its ability to react to shortages/gluts today is any good).
In a centrally planned economy where monetary accounting has been replaced by labor time accounting, deflation is the natural tendency (as greater automation reduces labor time). Such an economy will have to plan for production on a larger time frame. If you were allowed to pre-order things in such an economy, it would be a relatively easy way to estimate demand for the future.