You are the best source of facts of the economy. Thank you for linking to my story. I'm glad that you found my facts accurate.
Biden's celebration for getting inflation down to 3% is not showing in the polls because we all have to deal with this continued, double digit increased cost of living. I learned from your article that we are look…
You are the best source of facts of the economy. Thank you for linking to my story. I'm glad that you found my facts accurate.
Biden's celebration for getting inflation down to 3% is not showing in the polls because we all have to deal with this continued, double digit increased cost of living. I learned from your article that we are looking for deflation of these high prices, and that it's possible!
The facts are the facts. What you brought forward that corporate media once again managed to overlook is that "disinflation" and "lowered inflation" are merely four dollar terms for "things get more expensive less quickly".
The catch-22 of deflation is that, regardless of prior inflation, price reductions are always a disincentive to supply. Particularly in manufactures, there is a certain need to incur cost before realizing sales. When prices are falling those marginal costs exceed the (shrinking) marginal revenue. When this happens the supplier will simply avoid supplying, as it is better financially to simply avoid both the cost and the revenue.
As we have seen in Japan and are likely to see in China, when deflation takes hold in an economy it can persist for years. In the US, the deflation of the Great Depression endured until the macro stimulus of WW2, a period of nearly a decade. The hyperinflation of the late 70s and early 80s ameliorated in about half that time and did not require the macro stimulus of a war.
As consumers, we always want lower prices. As workers (and thus suppliers of labor), we always want higher prices (wages).
Left to itself, the market would naturally resolve these divergent desires into a dynamic equilibrium. Unfortunately, the Fed and the whole of the government refuse to just leave things alone, and are constantly pushing the economy from one disequilibrium to another. The Fed used quantitative easing to produce inflation, and now is attempting to use quantitative tightening to produce deflation. As Japan showed, and as our own experience now confirms, the Fed's intrusions push both the inflation and eventually the deflation farther than would naturally be the case, with economically destructive effects.
You are the best source of facts of the economy. Thank you for linking to my story. I'm glad that you found my facts accurate.
Biden's celebration for getting inflation down to 3% is not showing in the polls because we all have to deal with this continued, double digit increased cost of living. I learned from your article that we are looking for deflation of these high prices, and that it's possible!
Thank you for the high praise!
The facts are the facts. What you brought forward that corporate media once again managed to overlook is that "disinflation" and "lowered inflation" are merely four dollar terms for "things get more expensive less quickly".
The catch-22 of deflation is that, regardless of prior inflation, price reductions are always a disincentive to supply. Particularly in manufactures, there is a certain need to incur cost before realizing sales. When prices are falling those marginal costs exceed the (shrinking) marginal revenue. When this happens the supplier will simply avoid supplying, as it is better financially to simply avoid both the cost and the revenue.
As we have seen in Japan and are likely to see in China, when deflation takes hold in an economy it can persist for years. In the US, the deflation of the Great Depression endured until the macro stimulus of WW2, a period of nearly a decade. The hyperinflation of the late 70s and early 80s ameliorated in about half that time and did not require the macro stimulus of a war.
As consumers, we always want lower prices. As workers (and thus suppliers of labor), we always want higher prices (wages).
Left to itself, the market would naturally resolve these divergent desires into a dynamic equilibrium. Unfortunately, the Fed and the whole of the government refuse to just leave things alone, and are constantly pushing the economy from one disequilibrium to another. The Fed used quantitative easing to produce inflation, and now is attempting to use quantitative tightening to produce deflation. As Japan showed, and as our own experience now confirms, the Fed's intrusions push both the inflation and eventually the deflation farther than would naturally be the case, with economically destructive effects.