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Joined 2 years ago
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Cake day: July 18th, 2023

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  • Deflation can be really damaging because it disincentivizes things like investments and longterm projects. Here are a couple of examples:

    • One of the biggest issues with mortgages is if you are under water (can you pay off your debt if you sell the house). With deflation, you could buy a house today and owe more than the house is worth tomorrow.
    • If the total cost to manufacture a car is $X, but by the time I can sell the car the market would only pay $X-50, then I’m actually better off not making the car.

    Essentially, high deflationary pressure causes people to hold their money and not spend it. It’s what happened in Japan around 1990s-2010s resulting in basically negative growth in their economy - Source

    Hyper inflation is a similar issue, but on the other end. The value of money is lost so quickly that things like life savings can become worthless due to money losing its value so rapidly.





  • I’m really confused by this one. Usually China seems to take the smart calculated move, but this knee jerk reaction seems to just prove the Dutch made the right move.

    If China feels like it can just cut off these chips whenever they want, then there was a real risk to continuing business as usual.

    While I think the US was overstepping in how it pressured the Dutch, the overall outcome highlights the continued risk of relying on China for these supply chains.

    Additionally Toyota seems the least impacted as they’ve apparently been shifting away from reliance on China for these chips, furthering proving that’s a smart move.