“Central banks have worked out, although they try to keep it a secret, that the natural state of the economy is to generate deflation. This is better known as productivity growth.
As companies become more efficient and workers more productive they produce the same amount of goods for less effort (or more goods for the same effort). In other words, the natural tendency of the economy is for the production cost of goods to fall.
That should be good news for everyone and result in a falling tendency in consumer prices which, when combined with stable wages, should result in an increase in real wages and worker purchasing power (it also leads to an increase in overall demand goods and services).
So why try to counteract this beneficial, natural tendency?
Simple: it makes it more difficult to pay back debt. More accurately, it makes it more difficult for governments to pay back their debt (individuals and companies find it easier to pay back debt when their real incomes are rising). The generation of inflation by central banks is an effort to provide governments (their bosses) with an easy way out of their debt problems: through inflation rather than fiscal prudence.”
shiould we infer that China's deflation "vortex" (see your BoA chart in Hartnett's tech take) is the result of extreme productivity growth? It is after all the number one high tech economy on the planet, and should therefore benefit (or suffer?) from deflation the most
Lack of demand from various factors, including, but not limited to global slowdown in demand of goods, dissuasion of foreign money for investment, and intense dislike of making their people consumers. The supply or increase production is an anticipation of increased demand. The demand hasn’t come yet. Think of it like the ghost cities a couple years ago.
shiould we infer that China's deflation "vortex" (see your BoA chart in Hartnett's tech take) is the result of extreme productivity growth? It is after all the number one high tech economy on the planet, and should therefore benefit (or suffer?) from deflation the most
Lack of demand from various factors, including, but not limited to global slowdown in demand of goods, dissuasion of foreign money for investment, and intense dislike of making their people consumers. The supply or increase production is an anticipation of increased demand. The demand hasn’t come yet. Think of it like the ghost cities a couple years ago.
Sir. Sorry to bother you but I feel you could like a lot the last mark wauck's sy swap piece... Mixing together a lot of items 😉
Not familiar with it. Send