Is it possible for Deflation or even Hyperdeflation to occur? - People know about the opposite in Hyperinflation, but has the other way been tried?

[Thiletonomics]

There have been numerous examples of inflation running extremely out of control the point of TRILLION dollar notes being printed, i.e. in Zimbabwe, and Venezuela also set the bar extremely high with hyperinflation.

Tema 'Hyperinflation'

1 de Mayo, 2021

I think it's worth discussing the hyperinflation of the U.S. dollar. But first, some background.

Historically, hyperinflation was an instant death knell to a country. After losing WWI, Germany owed a fuckload of war guilt debt to the tune of 132 billion Marks to the countries they lost to because fuck you, Treaty of Versailles. Unable to pay it off the normal way because the Treaty of Versailles put the screws to the Weimar Republic by barring them from paying off their war guilt with Marks, Germany started printing the Mark to purchase accepted foreign currency and use that to pay off...

• MarvinTheParanoidAndroid
• Respuestas: 465
• Foro: The Bidness

Reacciones: x 16 x 10 x 15 x 1 x 2 x 1 x 1

However, has the opposite been tried by a Government, where they intentionally try to deflate their currency? And what steps would it take for that to happen? It would require a large amount of money being removed from supply, so would the Governments go after the middle-class in poor in mass, or would they go after the rich in the literal "EAT THE RICH" fashion? Going after the poor or middle-class would lead to a mass rebellion unless the Government makes preparations to prevent that, i.e. banning people from having weapons and mass arming military to literally mow down protestors. Going after the rich wouldn't be easy either, as the rich already have ways to hide their assets overseas where the Government can't seize it.

 

[SCV]

>Is it possible for deflation [...] to occur?
Yes, obviously, because it has happened before.

>Is it possible for [...] hyperdeflation to occur?

However, has the opposite been tried by a Government, where they intentionally try to deflate their currency? And what steps would it take for that to happen? It would require a large amount of money being removed from supply,

This belies a complete lack of monetary theory. Deflation means currency gets more valuable over time. In an environment where this is happening quickly the vast majority of actors will reduce their spending to only their basic needs (food and water for people, staff costs and previous commitments for businesses) because money you don't spend gets more valuable. As a result most economic activity just stops which turns out to be really bad for the economy.

This upsets everyone and unlike inflation the fix is super easy: just print more money. So the central bank/government/whatever will just do that.

 

[Peeing In The Shower]

You don't really want this.

You want low inflation and for wages to keep pace with it.

This requires mass deportation in modernity.

 

[used_a_throwaway]

You want low inflation and for wages to keep pace with it.

Found the banker

 

[Beelzebub's Lawyer]

I don't know if this counts but in Poland in 1995, they did what they referred to as a "currency replacement".
Basically, they introduced a new currency that was worth 10000 times more than the old one and over the next 2 years, they completely replaced the old one.
What used to be 1 million Zloty became 100 Zloty.

 

[ShootyPee]

Seems like the US govt is just gonna keep printing money to devalue outstanding debts, labor and increase asset value. If you don't play with money like the manipulated credit it is you're screwed. This is how I feel

 

[Lord of the Large Pants]

God, I hope so. I am holding so many Jewdollars.

 

[TEA 3HF]

I am not an economist but from what I do know it would take the AI bubble bursting. It eould take trillions of dollars worth of debt being completely wiped the fuck out. When you understand that the people that hold the majority of that debt are the ones who are in absolute power and control of fiscal policy, the answer to this question becomes self evident.

 

[Thiletonomics]

I don't know if this counts but in Poland in 1995, they did what they referred to as a "currency replacement".
Basically, they introduced a new currency that was worth 10000 times more than the old one and over the next 2 years, they completely replaced the old one.
What used to be 1 million Zloty became 100 Zloty.

That doesn't sound like deflation, since the currency remains the same, but it's just zeroes lopped off. Venezuela did this with the Bolivar by introducing "renamed" versions of it, i.e. the Sovereign Bolivar. I think they removed something like 14+ zeroes when they did this 3 (?) times to their currency because of how bad their hyperinflation was.

 

[Fishnumm]

deflation is really bad for the economy its a big part in why the japanese economy has stagnated so much in the past 30 years

 

[Quijibo69]

Don't forget you will own nothing, eat bugs and live in the pod. I'm saving money right now for a van to live out of by the end of the decade.

 

[PeachDream]

This belies a complete lack of monetary theory. Deflation means currency gets more valuable over time. In an environment where this is happening quickly the vast majority of actors will reduce their spending to only their basic needs (food and water for people, staff costs and previous commitments for businesses) because money you don't spend gets more valuable. As a result most economic activity just stops which turns out to be really bad for the economy.

Has this actually been tested? Kind of seems like speculation that doesn't even make sense intuitively.

Like sure, people would be less likely to just dump extra money in an index fund to keep it at pace with inflation, but is that even a bad thing?
A lot of the bubbles and insane valuations and private equity making everything dogshit is cause they're flooded with Grandma's pension money.

Seems like 0% really is the target. Investing just to invest shouldn't really be encouraged.

 

[Thiletonomics]

Has this actually been tested? Kind of seems like speculation that doesn't even make sense intuitively.

Like sure, people would be less likely to just dump extra money in an index fund to keep it at pace with inflation, but is that even a bad thing?
A lot of the bubbles and insane valuations and private equity making everything dogshit is cause they're flooded with Grandma's pension money.

Seems like 0% really is the target. Investing just to invest shouldn't really be encouraged.

Didn't Japan also tried setting their interest rates to negative at one point? And have other countries tried to do the same?

 

[SCV]

Has this actually been tested? Kind of seems like speculation that doesn't even make sense intuitively.

I'm not sure what you mean by tested but basically all depressions are just a deflationary spiral getting going. Most people will say it's a crash of crazy valuations as you mention or whatever and IMO that's how they are usually triggered but that's not why they get so bad and last more than a month. If it was just crazy valuations then you would expect the price to correct and... that's it.

Consider a car company making cars. The stock price of their already sold shares doesn't gain or lose them any money so why would a depression affect them? It's because people stop buying their cars. And people would do that because assuming their current car still works they could buy a car today for $30k or that same car a month from now for $20k.

Like sure, people would be less likely to just dump extra money in an index fund to keep it at pace with inflation, but is that even a bad thing?
A lot of the bubbles and insane valuations and private equity making everything dogshit is cause they're flooded with Grandma's pension money.

If you're arguing that inflation is a mechanism to tax grandma's money she's stuffing in her mattress, well, yeah. That's the point. I don't even mean in my opinion I mean that's the explicit goal here. To encourage economic growth the jews want all capital in the system (which they control, natch). So you either invest your savings or we'll siphon it away at some % per year. If your answer is precious metal or other durable assets, remember, the US has made owning gold illegal in living memory (shortly after the central bank was created).

ETA: And social security and pension. Lie about real inflation numbers, base COLA adjustments on that, and hey presto! you can jew everyone out of their pension as well as their cash savings.

Seems like 0% really is the target. Investing just to invest shouldn't really be encouraged.

I would agree with this. And it may surprise you to know that that's what the US basically had from inception to 1913 when the US central bank, aka The Fed, was created. The Fed's target is officially 2%.

ETA:

Didn't Japan also tried setting their interest rates to negative at one point? And have other countries tried to do the same?

A lot of central banks will have negative interest rates at times. I know it happens in the EU a lot. Basically due to reserve requirements with the central bank smaller financial institutions will be forced to accept these. This never happens in consumer finance because no one would accept it due to the loss aversion in human psychology. Either way these are usually temporary and I'm not aware of any long term use as policy in order to try to actually induce deflation.

 

[PeachDream]

Didn't Japan also tried setting their interest rates to negative at one point? And have other countries tried to do the same?

I mean I'm reading the Wiki article on the bubble and it looks like the initial crash was due to a lot of corruption, everything being in a massive bubble, and unsustainable trade policy.
Also it's not like they set the interest rates to negative, they just set them positive but close to zero. It also says the economy did improve a bit under this policy, but it was eventually ended around 2000.

 

[sodaboard]

as nice as it would be for everything to become 20% cheaper deflation has dramtic, mostly negative effects for the rest of the economy. at best you get to say that the price of bread is now worth what it was 10 years ago, but as others here have pointed out the negative effects, while not immediately apparently, are far worse. it's better for real wages to keep up with inflation than it is for currency to deflate as a whole. the hyperinflation you're afraid of really only occurs in shithole countries that are being pressured by foreign powers they have no control over (weimar) or as a last-ditch attempt at preventing total ecnomic collapse (zimbabwe, venezuela).
you should be more angry that more and more people are getting the shaft on actual living wages so that third worlders will do the same work for pennies and send what little they do make overseas in remittances

 

[Sneed's Feed n Seed]

If you are constantly adding value, with fixed money, money deflates.
If you are constantly adding money, with fixed value, money inflates.

Steady state (no inflation or deflation) means you add money and value at exactly the same rate. Good fucking luck figuring out how to do that. If we have a toy grade school economy of cookies and quarters, you just do one quarter per cookie, period. Great. Now do that in a real economy.

Right.

The real secret behind it all is that the trick comes down to who you give the printed money to. You want to give it to businesses that actually produce fucking value! Someone takes out a loan and farms shit, you turned dirt and labor into food which is worth money!

That's why banks do this. That's how fractional reserve banking works. They give money to someone, but only need a fraction of that (hence fractional reserve) to loan it. They end up getting money back over time, because the producer will be able to make money selling the value they created, and of course the interest on top. This isn't really a problem per-se unless interest is usurious.

If anyone says PRINT MONEY BAD I'd love to see an alternative that would actually work.

If someone says INTEREST BAD I'd agree. FUCK usury. Fixed fee is an alternative that we see (Islamic, etc) actually work.

 

[Thiletonomics]

Also, when Pol Pot did the "literally blowing up banks" to try to revert back to a "REAL" Communist society, how much currency was destroyed as a result? Did that actually lead to deflation at the time?

 

[Sneed's Feed n Seed]

Also, when Pol Pot did the "literally blowing up banks" to try to revert back to a "REAL" Communist society, how much currency was destroyed as a result? Did that actually lead to deflation at the time?

The destruction of the entire system and the economy as a whole would have basically led to crisis pricing and eventually barter lol.

 

[SCV]

Just to add to the "real wages should keep up with growth" here. You should know that basically everyone should be making like $250-500k at least. https://wtfhappenedin1971.com/

These lines should match:


The "why" is straight forward. The US went off the gold standard in the 70's and in 1965 the (((Hart))) (((Cellar))) act was passed, changing immigration law so infinity migrants could be used to suppress your wages. Also (((feminism))) started and your wife was used to depress your wages as well.