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Line 1: − + − '''Deflation''' is the opposite of [[inflation]], but liberals consider deflation to be worse. The [[Great Depression]], for example, was characterized by deflation. [[Japan]] has struggled with deflationary forces since the mid-1990s.<ref>http://www.japantimes.co.jp/opinion/2017/03/29/commentary/japan-commentary/the-truth-about-deflation/#.WV7wq-kpCUk</ref>+ + + Line 14:
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Line 23: − == China's major economic crisis putting deflationary pressure on its economy == − Presently, [[communism|communist]] China is facing multiple crisis with the three major crisis below being signs of growing deflationary pressures on their economy:+ − + − *[[Chinese stock markets|Chinese stock markets crisis]] (Since 2021, China’s stock markets have lost about $7 trillion in value.<ref>[https://www.marketplace.org/2024/02/06/why-chinas-stock-market-struggling/ What’s going on with China’s stock market?], MarketPlace.org</ref>) − − *[[Youth unemployment in China]] − − == See also == − *[https://www.investopedia.com/terms/d/deflationary-spiral.asp Deflationary spiral]
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'''Deflation''' is when the cost of goods decreases over time, and thereby "deflate" in their prices. For example, deflation would exist when something that cost $1 last year then costs only 95 cents this year. The value of paper money (e.g., a dollar bill) may increase during deflation. Annual interest rates on savings can even become negative rather than the usual positive, as depositors may have to pay banks to safeguard the money.
'''Deflation''' is a reduction of the amount of amount of [[money]] in circulation.
When the cost of goods decreases over time, and thereby "deflate" in their prices. For example, deflation would exist when something that cost $1 last year then costs only 95 cents this year. The value of paper money (e.g., a [[dollar]] bill) may increase during deflation because of the shortage of dollars in circulation.
Deflation is the opposite of [[inflation]], but liberals consider deflation to be worse. The [[Great Depression]], for example, was characterized by deflation. [[Japan]] has struggled with deflationary forces since the mid-1990s.<ref>http://www.japantimes.co.jp/opinion/2017/03/29/commentary/japan-commentary/the-truth-about-deflation/#.WV7wq-kpCUk</ref>
Some properly disagree with the [[liberal]] opposition to deflation. As one observer points out, "[t]he period of the greatest growth in the U.S. during the nineteenth century, from 1820 to 1850 and from 1865 to 1900, was associated with significant deflation."<ref>http://mises.org/library/what%E2%80%99s-so-scary-about-deflation</ref>
Some properly disagree with the [[liberal]] opposition to deflation. As one observer points out, "[t]he period of the greatest growth in the U.S. during the nineteenth century, from 1820 to 1850 and from 1865 to 1900, was associated with significant deflation."<ref>http://mises.org/library/what%E2%80%99s-so-scary-about-deflation</ref>
*the loss of manufacturing and other good-paying jobs, which results in less income for consumers and fierce shopping for bargains.
*the loss of manufacturing and other good-paying jobs, which results in less income for consumers and fierce shopping for bargains.
== Effect on [[Gold]], Interest rates, [[Stock market]], and [[Bond]]s ==
== Effect on [[gold]], [[interest rate]]s, [[stock market]], and [[bond]]s ==
Deflation causes declines in [[gold]] prices and interest rates, but increases in the value of long-term [[bond]]s and potentially the [[stock market]] as investors seek higher rates of return than bank deposits offer. However, rates of default on bonds can increase due to deflation as borrowers have difficult paying back the principal.
Deflation causes declines in [[gold]] prices and interest rates, but increases in the value of long-term [[bond]]s and potentially the [[stock market]] as investors seek higher rates of return than bank deposits offer. However, rates of default on bonds can increase due to deflation as borrowers have difficult paying back the principal.
Food deflation was rampant in 2016, due to increases in supply and low-cost competition.<ref name="Forbes">https://www.forbes.com/sites/phillempert/2017/02/01/food-deflation-is-changing-the-face-of-retail/#2818fc3326ec</ref> Retail grocers lost in value despite increases in the stock market overall, including [[Wal-Mart]]. "Kroger, Whole Foods Market, Sprouts Farmers Market, and Supervalu lost 17%, 29%, 8%, and 31% of their respective value" in 2016.<ref name="Forbes"/>
Food deflation was rampant in 2016, due to increases in supply and low-cost competition.<ref name="Forbes">https://www.forbes.com/sites/phillempert/2017/02/01/food-deflation-is-changing-the-face-of-retail/#2818fc3326ec</ref> Retail grocers lost in value despite increases in the stock market overall, including [[Wal-Mart]]. "Kroger, Whole Foods Market, Sprouts Farmers Market, and Supervalu lost 17%, 29%, 8%, and 31% of their respective value" in 2016.<ref name="Forbes"/>
== See also ==
*[[Chinese real estate crisis (2020–present)]]
*[https://www.investopedia.com/terms/d/deflationary-spiral.asp Deflationary spiral]
== References ==
== References ==
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