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According to an article in The Financial Times, declining electric vehicle prices in China suggest a potential for “deflation.”
However, this assertion is directly at odds with a study conducted by the Bank of International Settlements (BIS), which examined 140 years’ worth of data across 38 different economies and found that the connection between deflation and economic contraction is “weak”.
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EU countries had deflation for years post-2008 because of neoliberal policies but China having deflation for a few months after a year of higher than normal inflation is bad apparently.
A Morgan Stanley consumer survey for December, published in January, found just over half of respondents expected the economy to improve in the next six months. But it also noted that 76 per cent of consumers have made spending cuts to at least one category in the past six months, and that across all categories, consumers were downgrading to cheaper brands more often than they were upgrading to more expensive ones.
Ok why is that inherently bad? If the cheaper product is 90% as good the expensive product why would you get the cheap one?
2015: “Europe has endured deflation before, and prospered”
https://www.ft.com/content/14c9bcee-9659-11e4-922f-00144feabdc0
I do not know if EU is prospering considering that its economies have been stuck since 2008
Exactly the whole narrative is nonsense, and EU would’ve probably been fine if they continued having good relations with Russia and China giving them access to cheap energy and manufacturing. Now, things aren’t looking so hot.
