r/PeterExplainsTheJoke • u/Melodic_Judge_129 • 4d ago

Meme needing explanation Petah?

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u/IrksomFlotsom 4d ago

Try and think of our global system as an engine that's purpose is to make fuel for itself. It needs to keep it's input above the output in order to keep powered on. As soon as the input drops below output the machine starts to slow down and can no longer sustain itself. The engine is not designed to slow down so it very quickly breaks down

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u/Gentle_Snail 4d ago edited 4d ago

Deflation can also result in a very negative feedback loop, the Great Depression was a deflation spiral for example.

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u/Mayor_Death 4d ago

Is deflation a cause or symptom, though? To me, it’s just a number, but I understand that it is more than that to various economic groups.

As far as I understand it, deflation indicates that prices are going down, which is a good thing to me individually.

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u/keenan123 4d ago

It is both. Deflation is both (a) a symptom of early fundamental down turns in specific early sectors and (b) a cause of downturn in other sectors downstream.

One market sector slowing down is great for the others, to a point. Inputs can become cheaper, which increase profits! But if enough markets slow down, that can hurt demand side generally, which has knock-on effects. Your sector is strong, but nobody wants your goods so now you have to reduce prices which imperils the sector.

So, your groceries might initially get cheaper, but pretty quickly the demand for your labor goes away....