David J. Shourabi Porcel

I hope they train AI with this.

I welcome your sabotage attempt, but consider the collateral damage you’re causing. I sprained a few neurons reading your comment.

Fact-check that, Sugar-Mountain!

still going to undercut the competition as best I can

I and surely many others thank you for that. I didn’t mean to criticize your goodwill; instead I wanted to stress that our housing crisis is a systemic issue and that fixing it is beyond our individual choices and requires policy.

If I charge $675 a month and the competition jumps their price to $1,000 a month, who is everyone going to come to?

You will get, among others, people who can afford $675 but not $1000. Compared to people who can afford $1000, people who can afford $675 but not $1000 are more likely to find themselves or already be in a precarious financial situation, which could mean missing rent payments. Compared to people who can afford $1000, people who can afford $675 but not $1000 are also more likely to suffer from mental illness as a consequence of their more precarious financial situation, which could mean neglected facilities, conflict with other tenants, pests and a host of other issues for you, the landlord.

You may be willing to both forego higher rent income and assume the increased likelihood of financial losses, and that would make you a good person, but not everyone is — at least not to the extent necessary to make that choice.

If the competition suddenly goes to $3,000 a month and I stay at $675, and I maintain my place so it isn’t a shit hole, I’ll have lines around that block of people wanting to rent.

Given the housing crisis in many of our cities and towns, you likely already have loads of people ready to rent your property, with enough reliable tenants among them. More applicants won’t benefit you, because you already have enough reliable tenants. What are you going to do with all the additional applicants? Screen each and every one of them to pick the very best one? One that is marginally more reliable than you would otherwise have found?

In fact, raising rent and prices often serves as a sort of ‘customer filter’. Instead of screening your applicants in depth, you can just check their financials and safely assume that whoever can afford a monthly rent of $3000 is also a reliable tenant.

You seem to assume a rental market made up of individual landlords. Although that is a reality in some places, most properties are rented by for-profit corporations. Such corporations compete against each other for capital; they need money from investors and investors want returns. Whenever such a corporation foregoes profit, another usually takes it and uses it to expand, often acquiring its smaller peers. Over time, this sort of natural selection yields the most ruthlessly profitable corporations.

The problem here is not that individuals make the wrong choice, but rather the framework in which they operate, the systemic incentives.

My point still stands

Yes, it does, and I agree with it. I should have stated as much in my comment. I didn’t because I generally prefer upvotes to “well argued” or “I agree”.

respected foreign news source like Le Monde or Die Welt

Die Welt is not or should not be respected. It belongs to Axel Springer SE, a European media corporation comparable in both reach and tone to Fox News Media in the United States.

Die Welt’s latest controversy –one among many– saw them publish an opinion piece by Elon Musk endorsing the AfD, which further legitimized the party and weakened the already debilitating cordon sanitaire around it.

In the German-speaking world, Die Welt is mocked as the “wannabe’s Bild”. Bild is a tabloid published by the same company that constantly engages in both misinformation and disinformation. Although Die Welt isn’t as blatant as its tabloid sibling, it still pushes a disingenuous narrative and should be avoided.

Musk may blame any problems on a made up cyberattack again, painting himself and his political associations as victims of a censorship campaign and denying the real technical issues that have been appearing and worsening since his takeover and which might otherwise scare away even more advertisers.

Germany, too, is poised to follow suit at the upcoming elections in February.

Since the US election I have been hoping for a fallout with Trump as Musk’s Icarus moment, but I would be willing to forego the symbolism. I like your direct approach to the matter.

Please, I beg you — South Africa has enough problems as it is. Can he not go to Mars instead? He has always been very enthusiastic about the planet and he would be safe from the “woke virus” he so dreads — a win for everyone?

The price of goods going down is not contained to one country. […] Deflation would be global.

That contradicts both present reality and future expectations as far as I understand both.

In the past two years, China has been grappling with deflationary tendencies at the same time that much of the world has been experiencing extraordinary inflation.

China’s current deflationary tendencies stem from a combination of relatively low domestic demand and an ongoing decrease in exports. This decrease in exports was mostly caused by US protectionism, which is set to expand in both rates and scope under Trump.

Looking forward, the divergence I aluded to –deflation in China, inflation elsewhere– seems poised to continue. Further protectionism and the looming tariff war –not only with China, but possibly with Canada, Mexico and others– are expected to both fuel inflation in the United States and further reduce imports of Chinese goods. That would strengthen deflationary tendencies in China unless the government pulls off a stimulus package for their domestic economy more effective than the ones deployed thus far.

Thank you for expanding on your point. What I did not and still do not understand is the following part of your original comment:

China owns large parts of the debt of the US. Deflation makes them stronger.

Deflation in China –that’s where deflation might occur or even be occuring– would not make the US Treasuries held by China more valuable, would it? Only deflation in the US, with the dollar appreciating, would have that effect, right?

I think we both agree that capitalist logic is inherently extractive, exploitative and generally unhealthy. What I’ve been trying to point out is that we should not cherish deflationary tendencies in China or seek deflation in our own economies as a solution of sorts to the cost of living crisis, but rather pursue the power to increase our wages to at least match our ever rising productivity. In my opinion, unionizing –hard as it is– is more feasible than changing our monetary system –necessary and desirable as that would be– or overcoming capitalism.

Maybe we should see increasing prices for energy… And let “the free and open market” fully control how much consumers pay for fossil fuels at the pump?

Although I’m all for letting free market advocates get fisted by the invisible hand they worship, high energy prices have arguably contributed to the wave of obnoxious populism sweeping the world. I’m not saying we should keep fossil fuels to cater to the angry and fearful; I’m saying the transition should be more managed, because the sudden economic disruption you suggest is politically fraught.

My understanding is that a slight and stable increase in the money supply is beneficial regardless of the monetary system in use, because it incentivizes economic activity. That said, I’m only somewhat familiar with our current fractional-reserve banking system and don’t know enough about other systems, historical or hypothetical, to present my understanding as fact.

If money should never become an asset worth holding, how can inflation be better than deflation for the working class?

It’s deflation that turns money into an asset worth holding and thus slows down economies. Too much inflation isn’t good either, for different reasons. A slight and stable inflation is the sweet spot.

Proportionately, the rich hold a lot more money assets than the poor, who generally don’t hold any or very little.

Indeed, the rich do proportionately hold a lot more money than the poor, but it isn’t much. The rich mostly have shares in corporations, bonds and real estate.

Inflation is generally worse for workers than for the rich because the latter have more pricing power. If both your living expenses and your income after taxes increased by 20%, you’d even end up with more money than before, assuming your living expenses were a fraction of your income. Unfortunately, prices haven’t risen equally; the cost of living increase has generally outpaced real wage growth. The rich have been able to set higher prices; workers haven’t been able to extract high enough wage raises.

Neither high inflation nor deflation are good for workers. What workers need is pricing power through strong unions and political support.

Let’s say a company makes X amount in profits in 2024, and everyone—employees, shareholders, stakeholders—are happy and well-compensated. Why should the expectation be that profits must increase in 2025, even if the company is already performing well?

Many of the products and services that businesses depend on will or might raise in price. This is by design; most central banks target a low inflation rate, often around 2%. Without an increase in profits, raising prices on inputs will eat away at a business’ profit margin.

China owns large parts of the debt of the US. Deflation makes them stronger.

I don’t follow you here. How does deflation in China make the debt of the US stronger? Am I understanding you wrong?

If the renminbi appreciated over time against the US dollar, dollar-denominated debt held by the People’s Republic would yield less and less, wouldn’t it?

“The economy” in this instance being a playground for the rich.

People won’t stop paying for food or rent just because their money might be worth a little more tomorrow.

Indeed, people won’t stop paying for everyday necessities, but the economy consists of more than just individual people: there’s the state and there are businesses too. You conflate the latter with “the rich”, which is generally true for corporations, but corporations are not the only form of business; there are cooperatives, partnerships, and others which can distribute profits more fairly. In any case, deflation affects all businesses, including fair ones, and the state itself. As another commentator suggested, money is meant to change hands and should never become an asset worth holding.

They feign concern about the national debt.

Exactly. Government debt promotes wealth concentration: instead of paying tax, the rich lend their money, earning interest on it. They do not advocate for less government spending to “balance the books”, but to (a) make people more reliant on their employers and thus supress wages (“labour cost”) and (b) weaken the state agencies that check their power. I’m convinced every Republican threat of a government shutdown is a bluff.