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China consumer prices plunge at fastest rate for 15 years as deflation fears deepen
(www.theguardian.com)
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this post was submitted on 09 Feb 2024
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Economics
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Food prices are down! This is terrible! I'm so fucking confused!
When prices drop everyone holds their money waiting for it to drop more, which basically kicks off a vicious cycle deal
You want a currency that is staying relatively stable, becoming much more valuable is an in-obvious problem but much like becoming much less valuable, it precipitates a fall off in consumer activity that can have pretty ugly tack on effects.
And if food becomes too cheap producers will stop making it, which has its own obvious problems.
Fun fact, this is why price setting and price ceilings don't work,
The Nordic states have discovered a better solution is to have a maximum annual adjustment range, I think a refined approach would be to tie that adjustment to the federal interest rate, not only does it avoid gouge markets, it also balances the equation of vlas interests so that the wealthy and working class both have interests in raising and lowering interest rates.
That's an issue in a complete free-market state, but China is still nominally communist, i imagine that state control will occur before food shortages occur.
What? I’ve never in my life heard of anyone holding off on their eating habits because they thought food was too cheap. Where are you getting this information?
It's not the "too cheap" it's the sudden very noticeable drop in price, and if they don't notice at first, the continued drop in price to match the deflated currency value
Just look at everyone who's lost their shirt on crypto, hodl hodl hodl until the value starts dropping again and suddenly whoever got out last is poor as a grass farmer
So am I understanding then that you’re not talking about average consumers but bulk buyers?
No them too, you're not gonna see people willingly starve themselves in this pattern but you will see them go out of their way to avoid spending more than they have to on it
You're trying to assume that the entire premise is invalid because people will naturally have different spending habits for necessity, comfort, and luxury goods.