Asklemmy

43512 readers

1421 users here now

A loosely moderated place to ask open-ended questions

Search asklemmy 🔍

If your post meets the following criteria, it's welcome here!

Open-ended question
Not offensive: at this point, we do not have the bandwidth to moderate overtly political discussions. Assume best intent and be excellent to each other.
Not regarding using or support for Lemmy: context, see the list of support communities and tools for finding communities below
Not ad nauseam inducing: please make sure it is a question that would be new to most members
An actual topic of discussion

Looking for support?

Looking for a community?

Lemmyverse: community search
sub.rehab: maps old subreddits to fediverse options, marks official as such
!lemmy411@lemmy.ca: a community for finding communities

~Icon~ ~by~ ~@Double_A@discuss.tchncs.de~

founded 5 years ago

MODERATORS

How does inflation correlate with more savings vs more spendings? (lemmy.nz)

submitted 10 months ago by luthis@lemmy.nz to c/asklemmy@lemmy.ml

10 comments fedilink hide all child comments

A recent article: https://www.stuff.co.nz/business/money/301022706/prepare-to-find-another-70-a-week-to-get-by-in-2024-asb

says: ..if households decided the worst was over and started to feel more confident about spending, it could push up inflation

But I thought it was the opposite;

More spending means more demand means more supply, which means production costs go down (due to economies of scale)… so inflation goes down?

But saving means less spending, means less demand, means less income for business, means costs go up.. so inflation would rise?

you are viewing a single comment's thread
view the rest of the comments

[–] PeepinGoodArgs@reddthat.com 3 points 10 months ago

More spending means more demand means more supply, which means production costs go down (due to economies of scale)… so inflation goes down?

Supply may or may not be able to adjust quickly.

A good example is food. There's only so much that can be grown and distributed. So a high demand for food year after year only pushes up the price. The supply can't really grow exactly. You can purchase more, import it, but that's still probably more costly than local production. So importing it may actually make the price higher even while the supply expands.

Also, organizations aren't required to produce more. In an economic environment where...idk...you once found t-shirts for $5 for three, Hanes can make it $6 for three because what else are you going to do? Buy Fruit of the Loom like a peasant, who is also charging more for their clothes?

So if production can't or won't expand and/or supply can't it won't expand, you'll have more and more money chasing the same amount of goods, which leads to inflation.