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Deflation is much worse than inflation under capitalism. Working class Chinese people aren’t going to complain if the price of groceries or subway rides goes down.
On a micro level, yes. Groceries are cheaper, for now. The price will eventually rise because supply will eventually meet with demand. Deflation is much MUCH worse because it’s difficult to climb back out.
The deeper deflation gets, the more value the currency becomes. While that sounds good on paper, companies stops investing because if they just hold, their investments increase. Investors stop investing money into growth. Which slows growth, which slows investments, which reduces demand, which increases over supply which reduces investments.
This cycle continues and there is no jobs. There is no taxes being brought in. Your entire country becomes stagnant.
While I really dislike unregulated capitalism, capitalism has some positive perks that can create inflation to keep investments flowing into the market.
In Taiwan, we also have capitalism, but it’s a socialistic capitalism. Taxes paid gets redistributed back to the society. Unlike America. It’s the shitty capitalism.
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Deflation is much worse than inflation under capitalism. Working class Chinese people aren’t going to complain if the price of groceries or subway rides goes down.
On a micro level, yes. Groceries are cheaper, for now. The price will eventually rise because supply will eventually meet with demand. Deflation is much MUCH worse because it’s difficult to climb back out.
The deeper deflation gets, the more value the currency becomes. While that sounds good on paper, companies stops investing because if they just hold, their investments increase. Investors stop investing money into growth. Which slows growth, which slows investments, which reduces demand, which increases over supply which reduces investments.
This cycle continues and there is no jobs. There is no taxes being brought in. Your entire country becomes stagnant.
While I really dislike unregulated capitalism, capitalism has some positive perks that can create inflation to keep investments flowing into the market.
In Taiwan, we also have capitalism, but it’s a socialistic capitalism. Taxes paid gets redistributed back to the society. Unlike America. It’s the shitty capitalism.