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This Is Biden’s Soft Landing, and He Deserves Some Credit
(newrepublic.com)
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this post was submitted on 19 Nov 2023
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politics
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Alright, then what would people be waiting on to buy in a deflationary environment that they don't wait for in an inflationary environment?
"Econ 101"? Anything that I can get you to not buy by convincing you it'll be on sale in a month or two. New car, a house, electronics, IDK, cookware?
Actual stock market example? Investment is when you put money in now, in the hope that what you get in the future will be worth more than the money. If the value of money goes down, anything that doesn't follow the money as it falls is a good investment. If the value of money goes up, any investment has to not only rise, it has to outperform the currency to be worth it. The idea is that inflation makes saving pointless, so money moves from the piggy-bank into the economy, and is spun into growth, while deflation makes saving pretty smart, and pulls money from the economy into savings. That's why the recession in the seventies was such a big deal: "stag-flation" saw both inflation, and stagnation of the market, which is not typical.
"Econ 101" is an oversimplification and doesn't explain how the economy works practically. People don't put off purchases because their money is supposedly worth 2% more after a year. Similarly, people don't spend just because their money is supposedly worth 2% less after a year. According to you, people would only buy when there is a sale, unless it's an essential good, but it doesn't work out that way. Tell me how well the car and housing markets are going under inflation.
Yes, the "Econ 101" example is an oversimplification, it's why it's the "Econ 101" example.
Yes, which is why it doesn't apply to real life. It's an oversimplification.
If you don't understand the point of an oversimplified educational example, I'm afraid I cannot help you.
If you don't understand how an oversimplified example doesn't apply in real life, I'm afraid I cannot help you.
If you went through economy classes and didn't realize our fractional reserve system is built on a house of cards and misguided principles there is no point where you would actually understand the concepts we are talking about here. People still have wants and needs. People buy housing whether rates are good or bad, because they need a place to sleep. Yes investment property purchases will drop, but that's not the average american, nor is the average american realistically investing in the stock market beyond regular 401ks because we deregulated bank investments and you can no longer get a savings account for retirement saving. Stop measuring economy health based on manufactured data points like the stock market and you might actually understand how people function in an economy.