"Prepare for deflation in 2023"

[DrBeer]

You're absolutely right, but deflation through recession is precisely what the economies around the world need to control inflation. Because if the Federal Reserve, European Central Bank and other Central Banks around the world won't cause a recession themselves through QT/tightening of the money supply, then inflation will do it for them.

I disagree, it seems to me that deflation and recession are not mutually corrective processes. And what is important - recession, in my opinion, is not able to correct inflation.

Let me explain my position: Recession is a phase of the economic cycle when the economy falls and slows down. A recession is talked about when GDP declines for two quarters. That is, this process leads to a decrease in the circulation of money, but also reduces income and tax revenues to the budget. And this usually leads to the fact that the state will have to borrow money somewhere, because tax revenues are decreasing (state revenues), but mandatory state expenditures are not decreasing.

Therefore, the state either credits or "prints money", which can hardly be called deflation. If I am mistaken - please correct me ?

You're not wrong, but you're talking about something else. When the Federal Reserve and other Central Banks around the world start turning on the money printer and start the pivot to Quantitative Easing, then the situation has changed from that of being deflationary to inflationary. That's not a deflationary period anymore.

A deflationary period/tightening of the money supply, which causes a recession, and therefore curbs inflation, is still needed for the Central Banks to be given room to print money again, but hopefully more responsibly. In the current state of the monetary situation, the Federal Reserve have its hands tied. They can't print more money because risk of reinflation is still high. Core CPI needs to go down under 2%.

Thanks for the clarification, it does seem like we were talking about slightly different entities and processes.
In any case, we will watch the development of the situation, as today there is a high probability of the impact of the conflict in the Middle East, which may lead to a significant increase in oil, which will entail many not very "popular decisions" to support the economies of developed countries. And money printing will be one of the ways to keep the economy "afloat"

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[Wind_FURY]

You're absolutely right, but deflation through recession is precisely what the economies around the world need to control inflation. Because if the Federal Reserve, European Central Bank and other Central Banks around the world won't cause a recession themselves through QT/tightening of the money supply, then inflation will do it for them.

I disagree, it seems to me that deflation and recession are not mutually corrective processes. And what is important - recession, in my opinion, is not able to correct inflation.

Let me explain my position: Recession is a phase of the economic cycle when the economy falls and slows down. A recession is talked about when GDP declines for two quarters. That is, this process leads to a decrease in the circulation of money, but also reduces income and tax revenues to the budget. And this usually leads to the fact that the state will have to borrow money somewhere, because tax revenues are decreasing (state revenues), but mandatory state expenditures are not decreasing.

Therefore, the state either credits or "prints money", which can hardly be called deflation. If I am mistaken - please correct me ?

You're not wrong, but you're talking about something else. When the Federal Reserve and other Central Banks around the world start turning on the money printer and start the pivot to Quantitative Easing, then the situation has changed from that of being deflationary to inflationary. That's not a deflationary period anymore.

A deflationary period/tightening of the money supply, which causes a recession, and therefore curbs inflation, is still needed for the Central Banks to be given room to print money again, but hopefully more responsibly. In the current state of the monetary situation, the Federal Reserve have its hands tied. They can't print more money because risk of reinflation is still high. Core CPI needs to go down under 2%.

Thanks for the clarification, it does seem like we were talking about slightly different entities and processes.
In any case, we will watch the development of the situation, as today there is a high probability of the impact of the conflict in the Middle East, which may lead to a significant increase in oil, which will entail many not very "popular decisions" to support the economies of developed countries. And money printing will be one of the ways to keep the economy "afloat"

Plus Canada. I don't actually know what's the monetary situation in Canada, or if they're also tightening like many of the rest of the other regions, BUT there's some economic data that says that they are going into a recession. I can only presume that's because they're also having their own deflationory cycle because there's no other way unless inflation did it for them, which is obviously more dangerous.

[Biznesmen]

The world will talk about inflation, and China will talk about deflation. China is on the brink of deflation; the prices of goods and assets decrease across the economy and increase the value of money. The causes are less demand, high supply, a higher propensity to save, etc. If the deflation is longer, the effects are law growth, unemployment, recession, reduced wages and layoffs, reduced consumer spending, etc. Then the government is the one who should take initiative in matters like making loans cheaper, tax deductions, subsidies, boosting demand, etc. Inflation, or deflation, is a natural process that can be easily overcome with small cracks when the government takes action at the right time.

[DrBeer]

The world will talk about inflation, and China will talk about deflation. China is on the brink of deflation; the prices of goods and assets decrease across the economy and increase the value of money. The causes are less demand, high supply, a higher propensity to save, etc. If the deflation is longer, the effects are law growth, unemployment, recession, reduced wages and layoffs, reduced consumer spending, etc. Then the government is the one who should take initiative in matters like making loans cheaper, tax deductions, subsidies, boosting demand, etc. Inflation, or deflation, is a natural process that can be easily overcome with small cracks when the government takes action at the right time.

Let me partially disagree. In my opinion, in this example you are confusing cause and effect. It is unemployment, a decrease in industrial production, mass layoffs, as well as a slowdown and in some places a “freezing” of production - they are what give rise to a recession, but not vice versa. For example, take the “colossus with feet of clay” - Evergrande. Its bankruptcy or “stopping” will lead to truly dire consequences for the Chinese economy. In addition to laying off a lot of people in the Evergrande company itself, many hundreds of companies that provided its business will also be on the verge of bankruptcy! And this is probably more than one million, and maybe even more than tens of millions of workers who will be left without a livelihood. At the same time, I’m not sure that the Chinese government will start printing money to “support” these people, their families and those they provided for (parents, grandmothers, etc.) on social benefits.

[Suzume]

I don't know the proper definition of 2023. But 2023 is special for me because I have learn many things from this year. I have many wins or loses in this year and this year is a rememberable year for me. Because I lost someone who is closest person to me. I meet someone in this year who is special in my life. The year 2023 teach me a lot and help me to fixed target I want to do in future what I want etc etc.

[Wind_FURY]

Credit card defaults are surging faster than 2007 - 2008, during the last Financial Crisis.



The current economic situation might be worse than expected. Because of people can't pay for their credit card bills, that probably means they are out of savings, and if they're out of savings, then if they are  out of savings and can't pay their credit card bills, then there will be = Low Demand, which will also mean low earnings for businesses. Low earnings for businesses = Employee Lay-off = Recession.

[Vishnu.Reang]

Right now most of the countries are facing double digit inflation and with crude oil prices moving upward and nearing hundred dollars per barrel, we can expect inflation to go up even further also after covid most of the countries printed huge numbers of bank notes without any limit this also increased the inflation. Given this scenario I don't think that deflation is possible anytime soon. Nowadays people have lot of cash and there is a scarcity of different commodities in order for deflation to happen it should be the opposite scenario- less cash in hand and over supply of commodities.

[YOSHIE]

I asked myself and was a little curious about the economy and Bitcoin, as far as I know, every new ATH the price of Bitcoin continues to increase, maybe this is because the world economy is improving, maybe.

Question...?
What if the world economy is very bad globally, so can what OP says below continue?

Prepare to experience a big surge for Bitcoin like it was 2015 - 2017

It's not that I'm not sure, but looking at the current economic conditions, on average almost all over the world is bad, could this phenomenon possibly happen to Bitcoin, otherwise.

[DeathAngel]

Prepare to experience a big surge for Bitcoin like it was 2015 - 2017

I sure hope so, that was my first bull run. I was like a deer in headlights, euphoric but also clueless. Gains akin to those times would be amazing. We have the right macro financial setup, let’s cross our fingers & see how it goes.

[Wind_FURY]

I asked myself and was a little curious about the economy and Bitcoin, as far as I know, every new ATH the price of Bitcoin continues to increase, maybe this is because the world economy is improving, maybe.

Question...?
What if the world economy is very bad globally, so can what OP says below continue?

Prepare to experience a big surge for Bitcoin like it was 2015 - 2017

It's not that I'm not sure, but looking at the current economic conditions, on average almost all over the world is bad, could this phenomenon possibly happen to Bitcoin, otherwise.

Actually, the economic conditions "going bad" could also be seen as = economic conditions "cooling down". Because after more than 10 years of low interest rates, Q.E., and easy credit, the economy for many regions around the world were surging. But that's not sustainable. We're paying for the negative effects of easy credit.

Plus currently unemployment data and statistics are still low, but I believe because of Q.T. and high interest rates, we'll see those numbers surge, AND THAT'S WHEN THE PIVOT HAPPENS = BRRRRR-MONEY-PRINTING. Wait for it.