China’s New Enemy: Deflation

[Elderberry]

Lawrence Person's BattleSwarm Blog 8/12/2023

I have a whole host of “China is Screwed” videos I’ve gathered to post, but haven’t had the time to properly queue them up. So here’s a big picture piece from Peter Zeihan on China’s immediate economic foe: deflation.


https://www.youtube.com/watch?v=A9-wfHgjTB8

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•  Problem two: Deflation. The rest of the world suffered inflation when the lockdowns ended.

•  “The consumption boom never happened, so supply chains never had to adjust. What has happened is people are less confident in their future, so they’re consuming less.”

•  “We’re seeing mounting trade wars out of Europe, Japan, the United States, and increasingly secondary states like the Koreans are joining in. And that means the Chinese have fewer places to send stuff.”

•  “Product that was normally produced for export from China is now being locked up within the Chinese system at the same time that the population is purchasing less. You have an oversupply of goods and an under demand, both at home and abroad. With all those extra goods prices go down, and you get deflation.”

•  “This is what you would expect when you’re at the beginning of a deflationary spiral that’s caused by a fundamental mismatch between supply and demand, which is where we are going with deglobalization and the Chinese demographic. Trends which are now well past the point of no return.”

•  Japan’s deflationary spiral lasted 20-25 years.

•  Deflationary spirals are very hard to pull out of.

More: https://www.battleswarmblog.com/?p=55592

[LMAO]

Interesting article

And it’s also a grim peek into our future


The Great Depression was a deflationary spiral exacerbated by poor government policy

[Fishrrman]

I guess I'm the outlier in this forum, but I really don't see the downside of "deflation" (at least when compared to INflation).

So long as it's accompanied by a population that is actually decreasing (look at Japan for an example), folks may end up better off. Less competition for jobs, higher wages because of the lower number of available qualified workers, lower housing prices, lower prices all around.

Educate me.

[Weird Tolkienish Figure]

I guess I'm the outlier in this forum, but I really don't see the downside of "deflation" (at least when compared to INflation).

So long as it's accompanied by a population that is actually decreasing (look at Japan for an example), folks may end up better off. Less competition for jobs, higher wages because of the lower number of available qualified workers, lower housing prices, lower prices all around.

Educate me.

Well house values go down in deflationary periods where h has ent good fortune r people either.

[LMAO]

I guess I'm the outlier in this forum, but I really don't see the downside of "deflation" (at least when compared to INflation).

So long as it's accompanied by a population that is actually decreasing (look at Japan for an example), folks may end up better off. Less competition for jobs, higher wages because of the lower number of available qualified workers, lower housing prices, lower prices all around.

Educate me.

Deflation can make debt much harder to manage. And in a deflationary spiral, because of less demand for products and service,  corporations don’t produce as much, and so that causes an increase in unemployment

Plus the value of what you have goes down, such as your home or other property

What do you think would happen to this country with a Debt to GDP ratio at 120 some percent in a deflationary spiral?

[DB]

I guess I'm the outlier in this forum, but I really don't see the downside of "deflation" (at least when compared to INflation).

So long as it's accompanied by a population that is actually decreasing (look at Japan for an example), folks may end up better off. Less competition for jobs, higher wages because of the lower number of available qualified workers, lower housing prices, lower prices all around.

Educate me.

Deflation is deadly for those who have substantial debt. If you own a home with a mortgage you can quickly become upside down in the loan owing more than the value of your home. In addition your wages decrease making those payments even harder to pay.

[Fishrrman]

DB wrote:
"Deflation is deadly for those who have substantial debt."

OK, but I've had NO debt at all for twenty one years now. Paid it all off at once, and since then incurred nothing.

[DB]

DB wrote:
"Deflation is deadly for those who have substantial debt."

OK, but I've had NO debt at all for twenty one years now. Paid it all off at once, and since then incurred nothing.

That's excellent. But that isn't the case for the vast majority of younger people with young families who will have their lives turned upside down.

[Free Vulcan]

I guess I'm the outlier in this forum, but I really don't see the downside of "deflation" (at least when compared to INflation).

So long as it's accompanied by a population that is actually decreasing (look at Japan for an example), folks may end up better off. Less competition for jobs, higher wages because of the lower number of available qualified workers, lower housing prices, lower prices all around.

Educate me.

If prices and wages aren't 'sticky' and society has no debt, deflation isn't that big of deal. Purchasing power is the same if they both dwindle to the same level, and with no debt no one has to make payments with less money being brought home.

As it stands now, deflation would be disastrous for most people and the govt. Only benefit might be a stronger dollar, being we import so much stuff, but that's not guaranteed.

Much of the late 1800's was deflationary in the US, but because wages and prices were non-sticky, the country mostly prospered.

[Wingnut]

What goes up, must come down. 

[LMAO]

DB wrote:
"Deflation is deadly for those who have substantial debt."

OK, but I've had NO debt at all for twenty one years now. Paid it all off at once, and since then incurred nothing.

You would weather a deflationary spiral better than most. But you’re the exception.

[Idiot]

Deflation can make debt much harder to manage. And in a deflationary spiral, because of less demand for products and service,  corporations don’t produce as much, and so that causes an increase in unemployment

Plus the value of what you have goes down, such as your home or other property

What do you think would happen to this country with a Debt to GDP ratio at 120 some percent in a deflationary spiral?

People can't pay their loans, banks go under, the govt bails out the banks, we all lose.