Things I (Do) Worry About: Deflation || Peter Zeihan

We're all quite familiar with the concept of inflation, but inflation's dark and twisted sister -deflation- doesn't come out of his shell all that often. So, for our next episode of 'Things I Worry About' we're talking about deflation.

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#deflation #inflation #economy

[Raymondjohn]

The only American who won't acknowledge this Administration's failed economic policies is Joe Biden. "Shrink-flation' is the least of our worries compared to rising rents and stagnant wages, but it is an undeniable indicator of how bad our inflation has gotten. I have $100k that i like to invest in a non-retirement account, any advice on that?

[AllenNichol]

In these uncertain times, it's more important than ever to have a solid understanding of how to manage your finances, invest wisely and navigate economic downturns. But my primary concern is how to grow my reserve of $240k which has been sitting duck since forever with zero to no gains, sure I'm all in on the long term game, but with my savings are lying waste to inflation and my portfolio losing gains everyday, I need a remedy.

[Abyss-Will]

1:10 As someone from Argentina I still have to see this self regulating nature you speak of.

[DarkNowInDachau]

The problem with deflation isn't that it wipes out consumption - that's a symptom, not a cause. Irving Fisher nailed this down perfectly: deflation is a falling of prices, and a wage is a price for labor. Wages fall, but debt does not deflate; you still owe the same mortgage and car payment and credit card payments, etc., each month. But now you have a smaller income to pay it with. THAT'S what hits the general economy during deflation - those who hold very little debt love deflationary periods.

[Leftatalbuquerque]

As a beef farmer, I have never seen any significant increase in what I am paid in the ring for my year-olds entering the feedlots. Yet beef in the grocery store is obscenely priced.

[romeomargot-picquendar]

Inflation is not really self regulating, all the arguments for deflation apply to inflation as well. People expect prices to go up, so they start buying in bulk, driving up prices further, workers demand higher wages to keep up with inflation, which means companies have to raise prices to keep the same margins. This is called the famous Wage price spiral. Inflation unchecked can easily lead to hyperinflation which is almost as bad as deflation.

[skapur]

The way the US government spends money, we will never have deflation

[sdauss]

The Fed won’t let that happen. Printer goes

[jls]

As a 78-year-old, bleeding-edge member of the Baby Boomer Generation, I recall living through a period of massive demand for TVs, cars, and housing caused by the Boomers' spending and household formation. We are going to experience the reverse of that in the near future, specifically here in the US. Looking at the death spiral in the Japanese Economy since the 1990s and anticipating what is presumably happening in China right now is scary. Thanks, Peter, for your daily dose of Doom with my coffee.

[mnmeyers]

Yikes, a smart guy like Zeihan does recognize the role of money supply in inflation and deflation!!!!

[catcanair]

Inflation/deflation boils down to the value of the currency not inputs to commodities, as many seem to think in the comments. I think Peter would agree, Inputs can affect price but that’s not inflation. When the value of currency goes down then it takes more of that currency to purchase the same amount of goods/services (inputs). Giving the illusion that the value of products go up (prices) rather than the value of our money going down. Deflation is the opposite.
Love your videos Peter!!

[mkfourwinds]

I see a lot of people confusing disinflation with deflation and misunderstanding the seriousness of the issue.

[tangosmurfen]

If Japans economy keeps the same size while the population shrinks it could be considered a success

[OhTheGeekness]

There may have been too much manufacturing etc in the 1920s but let's not ignore the irresponsible banking practices that fueled this boom in manufacturing and consumption. Dig deep enough into any economic issue and the banks are always the root of the problem.

[pauljackson]

Love the Colorado mountains, but that was the best background yet!

[ranradd]

Great explanation, thanks. Beautiful day at the Cali coast too.

[MMDaniel]

I’m old enough to remember when Zeihan was telling us that 10% inflation was “baked into the cake” for the next several years.

[frankbieser]

I think you're confusing currency inflation (government created by printing too many dollars) and price inflation when demand outstrips supply (often caused by government meddling through embargo, tariff, etc). These are very different problems with very different causes. Deflation generally occurs when market forces "correct" the problem of excessive currency inflation. This is the "boom/bust" in various country's economies and poorly explained in history classes.

[hyprsha]

Hey Peter, Thank you for these small videos. I love them! Maybe a question you could answer: since you are there, what do you think of California economic, politic and environmental evolution?

[Chris.starfleet]

Was the talk to the Naval post grad school recorded? Can we see it? Please?