Ask Prof Wolff LIVE: We've Heard of Inflation, But What's Deflation?

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An audience member of Ask Prof Wolff LIVE asks: "What are the major historical downsides to a deflation? Are price decreases in a specific sector (e.g. fuel if, hypothetically, the shocks to that supply chain end sometime) generally isolated from these?"

Prof Wolff answered this question during a live Ask Prof Wolff event.

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“Marxism always was the critical shadow of capitalism. Their interactions changed them both. Now Marxism is once again stepping into the light as capitalism shakes from its own excesses and confronts decline.”

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[Qweertyyuiiop]

As food prices deflate, people stop buying food and they all die of starvation. "just 1 more month and it would have been cheaper" R.I.P.

Its why people dont buy electronics anymore, cause next year they will be cheaper. Oh Economists in disbelief

[therongjr]

It sounds to me that deflation is only bad for the capitalist class or those with the capitalist mindset: trying either to make as large a profit as possible or pay as little for something as possible. It sounds great for people just trying to get by.

[davidmcfatridge]

I've often wondered what kind of world 🌍 we would have without consumerism out of control. The need for more and more and more.

[stephaniecarrow]

It must work for the powers that be to keep the general populace in a constant state of economic upheaval between inflation and deflation. Otherwise they would seek a solution.

[wetrucken]

Mr Wolf is right when you have cash you have time he is so absolutely right

[yu-jdjg]

I think the world will proceed from an Inflation economy towards a Stagflation economy in the years ahead and most people will avoid keeping their Printed Currencies

[PriusOmega]

Richard, when you speak about inflation, deflation, cash, etc., do you consider the nature of the monetary unit? The fiat supply, issuance, and interest rates are all controlled by unelected elites and coperate bankers, and when inflation or deflation hits, the further away you are from the money printers, the worse off you are. It's to the nth degree if you aren't an American citizen, but still feel the full weight of US dollar hegemony.

[georgefurman]

If I am not mistaken Marx said that most people think with the stomach. Meaning that the people react according to how they are going to satisfy basic needs. The assault to the people's basic needs is usually blamed by the power of propaganda on government. Those who are seen as leading government are blamed for that assault. Since there is no alternative in leadership to counter that propaganda effect with the correct message the wealthy deflects their responsibility on the scapegoat blamed. That is the main reason for the success of the right in not only getting away with inflation to profit more but also with the defeat of the resistance in the political front by advancing the agenda of power grab. Because the world's leadership only cares in the immediate political astronomical need. The profits and social control to keep doing it. The macro economic and political issues are dependent on the immediate solution that in the long term are left out of the ultimate concern. The the system is in crisis and keeps the issues unresolved and any conversation about it is useless in this chaotic dysfunctional stubbornness of the ones in leadership. They are determined to keep doing the same. For them a solution to be found in a conversation is a threat .

[jamesmurphy]

Ownership of homes and a business more important over consumer goods more important over time

[jamesmorton]

The US FED insolvency sets the stage for . . . . . . CBDC FED_COINS.

[Redpoppy]

Deflation is nowhere near as bad for the "everyman" as Inflation is. The whole "logic" of holding cash so much the economy stagnates simply doesn't exist in the long term. For one, people do indeed horde money during deflation but there are always horder types to buy stuff just to buy stuff so no matter what the deflation will end unlike Inflation which doesn't end on its own until either the government fixes prices or some other economic trauma happens. Another point is people are not stupid enough to NOT buy things they need to survive and do what people need to do. Another thing is deflation helps the everyman by equalizing worker pay because while wages would fall, "real wages" would actually rise because the big companies have to keep spending no matter what but what they are able to exploit from people falls because they are on the wrong side of trading. During Deflation, a company has to buy product for lets say, a million dollars all said and done, but in the time it took to get their product to market, they are only able to sell it for $800, 000 and change.
Now yes, if the Deflation just kept going the Fiat system would indeed collapse but even then people would just go back to the barter system until a new Fiat is established and that is the most extreme case, in every other case, falling prices would just find a floor and people would just go on with their lives. I love Prof Wolff and get a lot of financial insight from the man, but this is one out of every 20 things he speaks about where he misses the mark.

[hectorrodriguez]

Wait 6 months. I love Prof. W. but he sometimes makes predictions that fizzle. There has been a general hoarding of energy that might be coming to an end soon with consequences on prices.

[rowo]

True examples of deflation in the past please? I can only think of the crash of prices in the housing market and wonder if this is a true example of deflation. Seems more like the burst of a bubble that doesn't last long.

[algee]

Deflation 1930-1932 -26%. So not so good.

[jamesberry]

So you can't buy, then you don't buy either way, it's the same result !! Really it's the same with assets and inflation why sell if it becomes more valuable. Especially if you just washed your electronic numbers into real assets.

[absstevens]

Baffled that Wolff thinks we are not incentivised to buy stuff, I think we are incentivised to buy things endlessly (advertising anyone!), and isn't this the fundamental logic of Wolff's capitalism hits the fan? A consumerist society facing relative decline? Also, I have never experienced a deflation, and I doubt anyone else has.

[GhostOnTheHalfShell]

The solution to deflation is *demurrage* on cash. Place a charge after 3 or 6 months of holding. Solves the need to use interest to put money in circulation and ends that central bank nonsense. Poof, no need for inflation at all. Price stablity.

Think Wörgl or Bractaeten or Freigeld.

[TC-eoeb]

The Nutty Professor ends the video with "there out to be a debate, can't we do better than that and my answer would be sure we can, we just have to have the courage to ask the question, have the conversation, and know we won't be any worse off by having the conversation and we may figure out a better system and that's what makes human progress what it can be" So I have the courage to ask Prof Wolff, what IS your answer ???? Give us a specific plan on how you would handle the current economic situation to make it better.

[GhostOnTheHalfShell]

The city of Wörgl instituted a stamp script in the face of recession. It restored commerce and in face the general concept eliminates the need for interest or a “target” inflation to prevent a deflationary spiral. A similar form of currency exists in the the city of Prien am Chiemsee, Bavaria to promote local commerce. Stamp scripts are an example of Friegeld, proposed by Gesell. It needs no interest rate to spur commerce nor do they suffer from deflationary spirals. They are price stable. A system of demurrage in fact eliminates the rent charging power of savers on their “cash”, which is the inherent *financial* driver of wealth transfer from labor and business to creditors. This proposal was notably made in The Money Supyndome.

[john.premose]

What we need is a lot more people coming to the conclusion on their own, that we can do better, and starting to question capitalism by name. Because I hear many, many people understanding and voicing how absurd the system is, but never putting 2 and 2 together that it's the capitalist system that has been designed to be this way