I remember watching a leftist streamer who understood Modern Monetary Theory and for some reason, they explained that deflation is actually much scarier for an economy.

Not that I believe any shitcaking of China from MSM, but just to counter some people in here saying deflation is good.

I gotta find it cuz I can't explain it myself 🥶

...I could not find it but thank you intelligent comrades for coming to my rescue ily meow-hug

[–] KobaCumTribute@hexbear.net 10 points 2 years ago (2 children)

It's because of debt: when there's lots of deflation (and when there actually is deflation and not just one particular good getting cheaper), the value of what's owed increases far beyond what was gained by taking on the debt in the first place. That can lead to things like debtors being unable to pay back loans if the deflation means they're not making as much as before.

A good example that I remember from one history class or another (I remember it specifically because the test on the material got it wrong, and the dipshit teacher thought it was about inflation instead of deflation and I'm still pissed about that 20 years later) was farmers in one of the decades of the late 19th century being hurt by deflation because all their machines and supplies were bought with debt but the value they could get out of the crops was suddenly worth less than what they owed for growing those crops in the first place. Which, uh, actually seems relevant now, depending on the economics of farming in China.

[–] CarmineCatboy2@hexbear.net 7 points 2 years ago

Which is just the thing, given that the largest banks in the world are just owned by the chinese State they have a much easier time dealing with a deflationary pressure than just about any other economy in the world.

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