But they won’t because people are expecting prices to drop even more. Food and necessities, sure, it’s kinda nice this month for that, but washing machines, a new TV? Better next month. And then the next. And then you don’t have a job any more because you’re working at a washing machine factory and nobody’s buying them and the economy is going under.
Deflation being bad is one of those (rare) instances where mainstream economics actually is right. Of course inflation is bad, too, but there’s a reason central banks tend to set targets just a percent or two into inflation: That’s way better than risking deflation.
I don’t know if deflation itself is that harmful or if it’s just a symptom of economic troubles, i.e. lack of demand. In any case, if it persists, that’s not a good outlook for the Chinese economy.
But they won’t because people are expecting prices to drop even more. Food and necessities, sure, it’s kinda nice this month for that, but washing machines, a new TV? Better next month. And then the next. And then you don’t have a job any more because you’re working at a washing machine factory and nobody’s buying them and the economy is going under.
Deflation being bad is one of those (rare) instances where mainstream economics actually is right. Of course inflation is bad, too, but there’s a reason central banks tend to set targets just a percent or two into inflation: That’s way better than risking deflation.
We don’t have alternative jobs in 2023! Everyone whose not a millionaire or richer needs to get their asses on the factory floor!
I don’t know if deflation itself is that harmful or if it’s just a symptom of economic troubles, i.e. lack of demand. In any case, if it persists, that’s not a good outlook for the Chinese economy.