/leftypol/ - Leftist Politically Incorrect

>>2595926
>prices going down good
Read a fucking book.

>>2595978
how about you tell me why I'm wrong

>>2595978
>abundance bad
Going to guess this is a neolib

>>2595978
>prices going down good
it happened for almost the entirety of the 19th century

>>2595926
>the consequence of unregulated capitalism is good actually
a thread died for this.

What would deflation in the US look like? Both its causes and its effects.

>>2596408
In a deflationary economy money actually gains value. Both spending and investment drop because holding cash becomes profitable on its own and people wait for prices to fall further rather than buying now. The economy crashes, deflation spirals out of control, people lose jobs and homes and eventually the government gets voted out in favor of anyone willing to stabilize the deflation rates. The fed tries to keep inflation at 2% instead of 0% in order to have safety margin against this.

>>2596518
Seems like a non-issue in a state controlled economy.

>>2596518
Given how consumerist the US is, would spending really drop that significantly? If anything lower prices could lead to people spending more. While prices could fall further, wouldn't the average person think that it's equally likely that prices could go back up? Leading to a FOMO situation.

>>2596524
This would be different but in a regular capitalist economy with most wealth being private its 100% a negative thing.

>>2596518
>Both spending and investment drop because holding cash becomes profitable on its own and people wait for prices to fall further rather than buying now.
Doesnt really make sense though considering alot of people would be willing to spend more of their money (me included), you could say TVs or some other electronics for example are in a deflation but the result is that people buy more TVs. To add to this, TVs from just 5 years ago arent worth selling used since new ones are cheap, the used market for them is basically dead (with the exception of some rare crt tvs since they fill a particular niche)

>>2596534
Its an issue in larger purchases like housing or vehicles. If you can save thousands of euros or dollars by waiting for a couple of months there is a real incentive to postpone consumption. When hoarding cash becomes an investment instead of a liability then investments into businesses decrease resulting in failed businesses and people losing jobs and this results in even less consumption. Like with hyperinflation deflation feeds more deflation and it can spiral out of control.

>>2596613
Wouldnt you able to adress by simply making money expire after ar certain time?

>>2596631
Im not sure my educated guess is that this would create just an another set of problems. I would focus more on socialism instead of trying to fix capitalism.

>>2596635
True

>>2595926

Here we go teaching the "marxists" marxian economics again

Deflation can result due to productivity increases. Deflation of necessary goods is the basis for relative surplus value, through which porkies can increase the rate of exploitation via lowering wages. This phenomenon is implemented concretely via relative inflation, through which inflation of commodities rises faster than wage rises, having the same effect as a direct deflation of wages but the mechanism is hidden from the worker to reduce class conflict. Productivity-derived deflation of capital goods on the other hand lowers the organic composition of capital, and thus constitutes a countervailing effect to the tendency of the rate of profit to fall.

Deflation is an entirely different matter in the context of a crisis of overproduction. Once the crisis hits, credit disappears causing a massive drop in demand and surge in debt payments, so capitalists clear their stock at low prices to get any money they can, investment stops and unemployment rises, leading to a drop in demand and sales, leading to lower prices still, reinforcing the cycle. Deflation here includes a lowering of wages due to a growing reserve army of labor. Because it is a systemic feedback loop there's no such thing as "prices are low so you can buy more!!1" because incomes fall in tandem with prices. Only once sufficient capital has been destroyed, sufficient debt has been settled, and wages and interest rates have fallen enough, will the rate of industrial profit be restored to the point that expanding production can once again be profitable.

So deflation as a symptom of a crisis of overproduction and indirect wage deflation bad actually, while wage increases tied to productivity increases good, as well as capital good deflation only because it increases in the rate of profit without resorting to class warfare