• @Gsus4@feddit.nl
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    1 year ago

    Sure, any economy can experience deflation if you have more goods chasing the same amount of currency, but the point is that most economies usually print money, that causes inflation (moderately that mimics around 2% (approx. linear resource growth) and 4% (rent extraction). Interest rates influence market behaviour that causes inflation but do not determine inflation.

    • @jarfil@beehaw.org
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      21 year ago

      I think we just live in an era when population doubles every 50 years, which means more demand, more production, and more currency needed to represent the value being transferred, which lead to more money being created.

      We got used to that, to a point where it’s become a kind of an act of faith. It’s not going to be like that forever, though:

      We’re way past “peak population” growth, and if nothing else were to change, eventually demand would go down, production would go down, and the amount of transferred value would also go down, with a rampant inflation and a need to drastically reduce the amount of money.

      But of course, it’s not the only change on the table. The AI revolution is right upon us, which will not reduce human demand, but will shift a bunch of production from humans to AIs, which is likely to increase the rate of value production several-fold, at the same time as increased interest rates are stifling the creation of money to combat the recent inflation.

      I’m afraid we might be coming into a perfect storm where a slightly slower growing demand, will be met with a much faster growing production from a much lower number of people, causing on one hand a sudden deflation, and at the same time an impoverishment of a large part of society unable to afford that value even at the deflated cost.

      • @Gsus4@feddit.nl
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        1 year ago

        Ok, fine, I hadn’t considered that and it’s a factor. None of the demographically declining countries like Italy, Japan, Portugal is doing great in terms of growth…but they don’t have deflation either. You also have the productivity growth factor into account with automation (meaning each citizen produces more but also uses more resources)