I mean yeah, lower inflation doesn’t mean prices go back down, and wages didn’t inflate for most people.
“inflation has slowed, but prices are still high? Why is that?”
literally the title of this thread/article
Man i sure wonder why my rate of increase % lowering hasn’t done much to change the value that it’s cumulatively adding on top of…
Inflation is still happening just slower. So things are still getting more expensive and wages are not following. It’s not rocket science unless the guy funding your research specifically asks you to never recommend any solutions that don’t make rich people richer.
“I’ve turned off the oven, yet food is still burnt”
If you really want to compare that to inflation slowing, then you haven’t turned off the oven, you just slowed down the rate that you are making it hotter.
Yeah. Because wages have remained stagnant, or even decreased relative to prices. Inflation is supposed to be a response to people making more money, but that never happened. So now we’re all just effectively poorer.
Inflation can happen for a bunch of reasons. It’s just always cited in arguments against raising wages. The proper answer to which is, prices went up last year anyways, why can’t prices go up a cent so I can have a dollar?
Prices didn’t go back down.
That’s deflation, and is actually really bad for society and the economy overall.
Honestly, more workers need to unionise and restore wages to where they should be (pegging back to rates in the 80s - 90s), minimum wage should be closer $25/hr.
If real wages continue to rise higher than CPI for blue/white collar workers, rather than the capital class - things would be a lot better overall.
Japan has had deflation for 25 years and the zombies haven’t shown up yet. In fact it’s a really nice place.
Turns out deflation isn’t so horrible if it’s only moderate, kind of like inflation.
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one of the really big problems with deflation in a system like the one we currently have is that there is no way to set a “negative” interest rate, at least trivially. So if something spicy happens, and you spiral down to a really aggressive negative interest rate, everything explodes instantly.
This is actually why we target a 2-3% interest rate, and in the times of financial struggle (globally) use it to create new money in order to stimulate an economy, which in turn raises inflation significantly, but beats another literal depression.
The primary difference between the great depression is that covid was significantly worse, and that modern monetary policy is incredibly resilient compared to back then.
you could theoretically have a system with deflation, but then the problem is that you have very little money moving through the market, and arguably you will move away from a currency based market, to a goods based market instead, which is quite literally a bad thing.
Deflation is actually bad because it would be an incentive to keep rather than spend money as its value would just increase by itself.
Money that is kept and never spent is worthless. Currency has to be used to have value, otherwise it’s just paper (or bits). The working class won’t hold on to their money, they have bills to pay, groceries to buy, etc. Only the wealthy would hold on to their money, which they’re already doing.
That was my point, pretty much. The issue is that money that’s kept is useless for society, but if its value increases it gains potential usefulness for its owner. I’m not saying that ordinary people will stop buying food and I’m not saying that corporations are doing community work right now, but the world in which the rich get even richer without even spending their money on something will be problematic at best. The economy will crash while everybody will hold on to whatever moves they have.
Only the wealthy would hold on to their money, which they’re already doing.
to be clear, “holding” on to money is innately going to be investing. Not only is holding onto significant piles of cash incredibly sketchy, it’s also really bad financial strategy, because you lose money over time, so you’re highly incentivized to invest the money you don’t actively need, into something that can do productive work for the market economy instead.
If we’re talking corporate money, which is different, and not the type of money you mentioned, things work a bit differently, but generally the mechanism is roughly the same, with some tax benefits, and mechanisms to create productivity rather than provide it instead. There are some funny things you can do like stock buybacks, but those do have some market utility though.
Only the wealthy would hold on to their money, which they’re already doing.
No, they invest it otherwise it loses value over time. Invested money is put to work.
Work? Like “buying” yet another company? Or stock buybacks?
Like loans to companies and individuals, startup investments, stock purchases, etc. Money that moves around is useful. Money that is tucked under a mattress is not.
We were living paycheck to paycheck before that inflation boom too.
But it’s also because inflation is a measurement of velocity, not a static indicator. If you have a year with ten percent inflation, that doesn’t go away without deflation happening and the finance industry would rather nuke the stock exchange than allow deflation.
News flash, most Americans were paycheck to paycheck before inflation, too.
They’ll keep waiting too. Because without some shock therapy like raising min wage to like $25 an hour overnight and taking that economic hit it’s never going to get any better. This is the new normal until that happens.
You guys are getting pay checks?
“Many Americans” have always and will always live paycheck to paycheck. Seize the means of production.
The median sits around 80k these days. Everyone should be cheering, right?
What nobody wants to acknowledge is that the mode is still high 30’s. Until that changes, we’re leaving people behind.
They were doing that too begin with though?
CNBC can fuck all the way off with that brain dead journalism.
