Are we in a state of deflation due to the pandemic?

Google / Eng
Oh! I see

Go to company page Google Eng

 Oh! I see
Dec 19, 2020 11 Comments

The money we have has slightly more purchasing power because corporations and small businesses are desperate to stay afloat, instead of focusing on large profits. eg. Rent, mortgages, travel, etc. Even food delivery services took a hit because people have more time to cook due to wfh.

Does that mean we have a slight deflation?

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 TOP 11 Comments
  • QE is deflationary in nature, we’ve been in deflation for a while; covid just sped it up. However, if the federal reserve act is amended, hyper inflation can occur.
    Dec 19, 2020 4
    • Amazon / Eng
      somepeeps

      Go to company page Amazon Eng

       somepeeps
      Creating the loans is inflationary, paying them back is deflationary, as you said. Since the interest is nonexistent, the fed can keep the loans on their books indefinitely, and we’ve seen the feds books from 2008 barely start to unwind until spiking again now, the same thing will happen with these inflationary loans, they’re never going to be meaningfully unwound, like Japan has already done.
      Dec 19, 2020
    • Amazon / Eng
      somepeeps

      Go to company page Amazon Eng

       somepeeps
      Yes, everyone with an inkling of financial understanding knows that the fed isn’t buying stocks (yet lol). But by buying treasuries and corporate bonds, they unleash such a huge demand that it inflated the assets so much, pushing the real market yields down. What would be a market 2% yield now drops to 0.5%. This has second order affects on other assets, because now that bonds and treasuries are overpriced for their real market value, and with them yielding almost nothing, it pushes investors into other assets, mostly now pushing up demand for stocks. By buying treasuries and bonds, you indirectly inflate demand for stocks.
      Dec 19, 2020
  • Maybe on a micro level. I think gains in food cost and real estate offset it. Fed targets 2% inflation and I think they’re meeting it.
    Dec 19, 2020 4
    • 0 rate environment for most of the last decade and it still ain’t 2% is the problem lol.
      Dec 19, 2020
    • Rakuten / Ops
      tooQ10

      Go to company page Rakuten Ops

      PRE
      Rakuten
      BIO
      Obligatory: YoE 20, TC 43k. Such is life for us non-SWE office monkeys!
       tooQ10
      The target is 0-2% per year and last year's 1.1% was in the range.

      I only wish we could have deflation. Continuing inflation has been one of the biggest destroyers of the working class over the past 50 years.
      Dec 19, 2020
  • Uber
    wncit

    Go to company page Uber

    wncit
    Deflation occurs when people stop spending because they are not confident about future or prices may further reduce or more. This discourages companies to produce more (as demand is low) which leads to more layoffs or less hiring. Investors refrain from funding startups which obstructs innovation. Basically a dead spiral down to deep hole.

    Federal reserve calculates inflation using basic necessities which haven't increased too much in price, but may increase due to reduced dollar price which makes import more expensive. But real inflation happened in asset prices, as real estate or stocks are more expensive now. Right now we are in wealth effect or illusion, as my stocks increased by 100%, so my NW increased so much and I am spending or splurging keeping economy afloat. With wealth effect, its keeping economy afloat but it needs continues Fed support which is not healthy sign.
    Dec 19, 2020 0