this post was submitted on 26 Aug 2024
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I am always caught off guard with this genre of reporting.
Do... do you not know how international trade works?
Price down is .... bad now? Just pay extra then and call it a tip!
The West has built itself an economy based on services and speculation. Meaning it's backed by nothing, other than imaginary concepts. So when the prices of tangible goods go down, the few EU/US/UK industries that use/produce them suddenly have to lower prices as they can't compete. If they lower prices, their stock goes down. If their stock goes down, then the whole speculation sector deflates in value. If the speculation sector loses value, the western economies collapse.
There's a similar worry with the price of steel (which is also "overproduced" by China after diminishing its construction sector), and don't forget the recent tarrifs imposed on EVs and renewable resources exported by China as well.
There's wider implications on the West caused by price cuts:
less profits for the capitalist class
line doesn't go up exponentially any more
the global south suddenly has viable alternatives to importing high-tech and manufactured goods
the financial instruments used to keep the global south down are no longer effective
None of those implications are bad UNLESS you are a manufacturer of those goods in the West. Or investing in those manufacturers. This is where WSJ falls flat on its ass.
The rest of the economy is a consumer of those cheaper goods. So the discounts on those goods makes the wallet go further. That's good for consumption. Consumers might even throw more money towards those dogshit services that economists are now in love with.
The way the western economy is tied together through stock markets though means that one company or hedge fund failing because one manufacturer goes down, will cause a domino effect (either due to panic or interconnected stocks). That's the fear anyway. We've seen exactly that when Intel's stock went down, which was only mitigated by the Fed printing money and silently propping up the stock market.
I agree the stock market is a big influence of the economy. Stocks are massively overvalued. There's not enough available cash in existence if there's big sell off on a major stock like Intel. Hence the need to print money. If the Fed didn't intervene, that illusion of stocks actually having cash value would vaporise.