Socialists of all types have been saying this for ages and explaining all the ways you could do it without succumbing to a deflationary spiral, but I’m sure libs will take this as evidence that Xi doesn’t understand econ 101 and that he’s ruining China.
That is an effect, it also increases the relative value of debts which isn’t great, but the negative impacts of those is less than the potential positive impact of reducing the relative cost of living. Really what you’ve got to focus on if you’re a government trying to manage deflation is a) capital flight and b) wage reduction, because the biggest negatives are seen if investment gets pulled out of the economy and the positives aren’t realized if people’s wages don’t stay the same.
Socialists of all types have been saying this for ages and explaining all the ways you could do it without succumbing to a deflationary spiral, but I’m sure libs will take this as evidence that Xi doesn’t understand econ 101 and that he’s ruining China.
Won’t deflation increase the value of money, and so enrich those with accumulated money more than those barely scraping by?
That is an effect, it also increases the relative value of debts which isn’t great, but the negative impacts of those is less than the potential positive impact of reducing the relative cost of living. Really what you’ve got to focus on if you’re a government trying to manage deflation is a) capital flight and b) wage reduction, because the biggest negatives are seen if investment gets pulled out of the economy and the positives aren’t realized if people’s wages don’t stay the same.