Rising Prices Are Bad, but Plummeting Prices Are Worse: Americans may envy China’s deflation. They shouldn’t (CW: The Atlantic)

Living in China is getting cheaper. Because rents in my neighborhood in central Beijing are dropping, my wife and I pressed our landlord to reduce ours by $140 a month in a new lease that we signed last month. He wasn’t too happy about it, but he’s lucky that we didn’t move out. Given the desperation of local landlords, we probably could’ve saved another $500 a month had we switched to a comparable apartment nearby.

BUT AT WHAT COST?

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One of the funnier things to say to libs here in the US is "real estate prices should drop by 90%" which forces them to confront one of their basic contradictions, which is gesturing toward "affordable" housing while wanting their house to continue going up in value.
- Tbf I don’t know how to square the contradiction, the value of houses needs to drop sharply but we’ve organized our society and retirement system around the idea that the value of a house will always increase. If home value drops 90% like it should, a lot of people no longer have money for retirement.
  I guess the answer is just “triple the payout of social security”
  
  Hand the deed over to their person living there
  Forgive all mortgage debt
  Forbid ownership of housing you don't live in
  Nationalize excess housing
  Construct housing based on needs of people living in an area/protected growth etc. Planned.
  
  Legitimately, what is their retirement plan if the value is stored in the house? Sell it and live on the streets?
- Yup this always breaks their abundance’ arguments.
- Maybe more concerned that they'll owe the banks half a million in mortgage debt on a property now worth $50,000.

I think is validity to the argument that capitalism as a system built on private debts should avoid deflation. True, from the worker's perspective it appears as if the prices are getting cheaper under deflation, but is that the case in the aggregate in the long term? Are capitalists laying off workers because debt servicing is more difficult? Does it discourage future investments? Will the state take over to create employment that's been lost?
In that sense, true price flexibility downwards can only happen in a centrally planned or heavily state interventionist economy as the state isn't financially constrained in the way private entities are. Under capitalism, it's best to have money wages rise than have the prices fall. But neither is happening in the West.
- In the US's case, post-revolution with a DOTP, we would probably want more price deflation than wage increase. Wage increases would necessitate a bigger gap between American workers and the rest of the world. Instead, eliminate capitalist profit margins to drop costs and allow some wage increase outside the US by newly state-seized firms. Price reduction is also necessary when you want to transition out of commodity production. The revolutionary state's goal should be to drop a threshold of necessary goods out of commodity pricing entirely, being entirely by virtue of membership in society. In parallel, it would need to facilitate to collectivization and communization of property and production (ala the Venezuelan communal projection) using state capital and technical support to allow individual communities to remove as much of their subsistence and eventually abundance (tm) from commodity and wage production as possible. Then the state assists in networking communes together, directly accelerating its own dissolution as the communal state grows and replaces the centralized state's functions.
  This is uniquely possible under a US revolution due to both its extremely high level of accumulated capital and its lack of external imperialist threats. A US DOTP, properly managed, could slingshot the entire planet towards post-state, post-class communism in a matter of less than a century, I believe.
  
  the objective of many failed U.S. Victoria 3 playthroughs
- Couldn't debt servicing get cheaper?
  The savings rate was already high in China and deflation is encouraging even more saving, so the supply of lendable money is up so the price to lend (interest) would go down to reflect that. That would be counteracted by the loss in ability to pay the loan as revenues go down. So the true cost of servicing debt could land on either side of that equilibrium depending on what force is stronger.
  
  That's the loanable funds model, and it's not the reality. In reality banks lend according on profitability, yes even in China where priority lending is a thing because otherwise it'll need capital injections from the Government. Capitalists take loans on if they think they get expected profits.
  Also there are stocks of debts vs flows of debts, deflation mechanically makes servicing of existing debt difficult, your argument is whether it will lead to lower rates on future debt which may spur investment.
  Interest rate is set by the Central Bank, not the market. Reserves then adjust according to demand. Given the nonsense 'inflation targeting' (which isn't real, CBs can't target inflation reliably), in a deflation scenario, it may lower rates to zero and try QE, but QE failed and will fail to create inflation or raise demand because the only effect it has on the real economy is via lower long term rates (since CB buys up a significant amount of long term gov securities). Regardless, fiscal policy will be needed, and it must be one which replaces the income lost by workers (via employment or transfers). Which goes to my point "Will the state take over to create employment that's been lost?".
  Savings does not fund investment. It is investment that creates savings.
  You can rearrange the Kalecki profit equation as :
  Worker Saving = Investment + Gov Deficit + Foreign Surplus - Profits
  So investment via bank loans comes first, and that creates profits for capitalists and savings for workers.
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Imagine how awful a society where everyone can afford to live would be. Just absolutely a terrible society where people don't needlessly suffer. I can't believe anyone would want such a world where nobody has to go without

"good things are bad actually" - the adults in the room

from the magazine that published "child-killing can be legal" and whose editor was a big contributor to the Iraq War

i need to believe these insufferable prop writers have suffering in their future. if i had my druthers i'd be in charge of their education

Leah Fahy, an economist at the London-based research firm Capital Economics, expects deflation to persist through at least the end of 2026. She told me that in the absence of structural reforms, “it looks pretty likely that supply will continue to outpace demand.” The risk is that China tumbles into a long-term deflationary spiral that saps growth, much like the one that contributed to Japan’s “lost decades,” starting in the 1990s. To avoid that fate, policy makers need to reform China’s economy to encourage more consumption than investment and let market forces cull bloated industries.
embrace xiaohongshu thought
But China’s leaders do not seem ready to pursue these changes. Instead, the Communist Party’s latest five-year plan, a draft of which was drawn up at a party conference in October, seems to promise yet more state-led investment in manufacturing and technology, ensuring the supply glut may well persist for years to come.
wait I thought they were talking about encouraging domestic consumption as a main point of the plan
ohhh this economist is just ideologically against state subsidies for core industries lmao
- Yeah, this just very thinly disguised laissez-faire propaganda. The main idea is just {
  |Nooooo you can't regulate my free marketerinoooos!!}. They even throw in a jab at Trump's tariffs at the end because any interference with the all-knowing Invisible Hand is equally bad.
  
  Pretty sure this is their foreign policy as well
- Economists continuing to be the high priests of capital
- Supply will outpace demand, which leads to less growth, economist says. In other news, more growth is being planned.

“Why would someone buy a dishwasher now if it can be cheaper tomorrow?”
…because people still need dishwashers?
“China has too much supply and too little demand”.
Cool, well here in the US we have the opposite problem. Not too good either. Besides, employers seem to be thriving when labor is high in supply and demand for workers is borderline nonexistent. How about let’s stop with the austerity and union busting to get people employed. Why bother hiring now when it could be cheaper later, right?
- i don’t even buy that china “has too much supply/not enough demand” tbh. there are over a billion people there. you could find demand for anything you can supply
  they’re conflating lack of overconsumption with lack of demand. they also export shit loads to the entire world so i dont see how they would possibly have that problem
  just sounds like capitalist pig cope. i hate these people
- Who does the dishes after the revolution?
  
  Everyone. Wash your own or at least start the dishwasher when it gets full.