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.
Deflation is not a problem in the Chinese case because of their unique circumstances. Chinese households have very high savings so they are actually better off from deflation. They also have an ultra high investment rate which is set by the government. So they don’t need to worry about a deflationary spiral.
For other countries deflation will have different effects which may largely be negative (although that still depends on why deflation is happening). However, the fears of deflationary spirals are … completely overblown. Not only does deflation require abnormal circumstances, but fixing it is extremely easy even for capitalist governments.
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?
Deflation is not a problem in the Chinese case because of their unique circumstances. Chinese households have very high savings so they are actually better off from deflation. They also have an ultra high investment rate which is set by the government. So they don’t need to worry about a deflationary spiral.
For other countries deflation will have different effects which may largely be negative (although that still depends on why deflation is happening). However, the fears of deflationary spirals are … completely overblown. Not only does deflation require abnormal circumstances, but fixing it is extremely easy even for capitalist governments.