Topic: China reopening was a flop, if we're heading to deflation, what about Bitcoin? (Read 612 times)

Let's just say it's an expected reference
1. YouTube has an option to enable subtitles, and enable auto-translation into your native language. And you can easily watch and "read" any clip
2. From the given example - Volvo and MG are not Chinese car industry, they are purchased business, with platforms and technologies developed by European companies.
3. Go to NCAP site, find testing of "Chinese" cars, check - whose brands and licensed models they are, and divide by 5 the number of certified cars. List the remaining Chinese, certified - check - how they are sold in EU/US/Japan. And here you will realize how the real picture of Chinese car industry looks like.

I've already told you - I have a longtime friend who moved to China a long time ago (closer to 2000), and has been working in their oil and gas sector for many years. And last year I saw an announcement of a gorgeous Chinese full electric SUV! I called him and asked him what's up with the Chinese car industry - can I order one, and WELL worth ordering. The answer was such - "...if you want to test - buy...". But to let you know - all less wealthy people drive European, American, Japanese cars.... They're expensive, but they're reliable and safe!"  On my question - "so in the new Chinese cars - and there are a lot of airbags, and safety systems, and seem to have improved the design and so on!" he said "yes, there is systemic advertising and support in the "masses", but .... search for information, for example, how airbags deploy in Chinese cars, Chinese-made, and you will understand everything...".

Bumping this with another I told ya:

China’s risk of deflation is ‘serious’ — one economist says it’s ‘time to act’
https://www.cnbc.com/2023/07/18/china-deflation-fears-add-to-growth-concerns-wall-street-downgrades.html

Now, there is some info here that might surprise, some, for example, the GDP growth was 6.3% from a year ago and missing  the expected 7.3%
, it might sound a lot but it comes over the results from 2022, when the growth was 0.4%, so it's more like a rebound from a period of nothing than actual growth. Much like every country exiting covid restriction went and had a +5+10 % growth.

And this is where it gets troubling:


And here it gets dangerous:
The bank keeps injecting money and there is no sign of inflation but serious dangerous of deflation and no wonder other authors have had the same thought as me and instantly thought: Japan!
China’s corporate woes are narrower than ‘Japanification’ fears

Inflation keeps going down in the EU and US, the UK has shown some really sharp drop, pretty soon they will be in the 2%-3% area and right now there is nothing stopping them either, China is already at the brink with 0.2%, there is nothing right now that can stimulate consumption, there is nothing to stimulate spending, and money printing won't solve the things either, besides nobody really wants to cut those rates anyhow.

This is going to be pretty interesting, it's going to be the first time in ages major economy would enter deflation since Japan did so everything is on the table.

NCAP tests have become pure garbage.
The Chevrolet Aveo which is a tin can with wheels (we had them as fleet cars so I've seen quite a few of them crashed), scored 95 in passenger protection, Ford Ranger pick-up scored 84.
Now, assume you're a passenger in those cars and there is an X5 coming at you, would you trust those scores?
https://www.iihs.org/topics/vehicle-size-and-weight

After I saw the aftermath of an accident where a drunk moron with an S class split literary in two a mazda 3, trashed a pole, and stopped in a fence only for him to walk on his two legs while the emergency guys were still puzzled about how to collect what remained of the people inside the mazda, I don't care about their ratings one bit.

I don't speak Russian so I searched for English news articles about the topic of crash tests of Chinese cars - and found about exactly the contrary

Chinese cars used to be life-threatening, are they safe now?


This is not the only source I consulted, for example there is also this one.  Also sources in German and Spanish are available with the same general tone, the Spanish one (from a highly renowned Argentine newspaper, Perfil) even claims that "Chinese cars are now the safest" . They're however all referring to the popular Euro NCAP crash tests. Maybe Russian crash tests are stricter? (I doubt it, but nothing is impossible.)

Sorry to bring up an old reply, but just happened to stumble across this video..... I recommend watching it. Today, the Chinese car industry, of course not tin moving carts 40 years ago, but ... they're still a long way from the level of the classic manufacturers... So, a review of Chinese car crash tests. This is a small sample, but if you are interested in the topic, and look for more information about crash tests, you will understand why China will not be able to get a significant part of the market of highly developed countries. The video is a crash test of classic models of the Chinese car industry that even TRIED to be sold in Europe.
The video is in Russian, you can turn on the credits and translation. I think you will find a lot of similar information in your native language by the words "crash test Chinese cars".... I'd rather ride a bicycle than a Chinese car

https://www.youtube.com/watch?v=bjj3sUVotv4

That is why China has gathered around itself a group of future "yuan slaves".... Under the beautiful songs, the idea of "fighting the monopoly of the US dollar", forcing them to give up the really secured currency (the US dollar) and switch to the "excellent yuan". Yuan in the world economic arena is 2.5% in world turnover, and most of it is with .... Hong Kong

But if the "slaves" are put on the yuan, then it will be possible to make them "China-dependent" consumers of the Chinese economy, which POSSIBLY will lead to some stabilization of the falling Chinese economy. Especially in light of the new non-public restrictions on the Chinese economy by the US and the West in general. So all we are seeing now is China's attempt to save its economy at the expense of "donor" countries and "yuan slaves"....

That's the thing, normally it would go like low, low, and start growing but we had an already subsidized and stimulated start when the lockdown ended and everyone was expecting the good numbers to grow from that, but we had two months of roaring dragons only to see it going down and further down, despite, and this is an important thing, factories in China coming back (to proposed 100%) at the time the energy crisis in Europe was already over. Much of the growth should have happened when the price collapsed and they went still further down as there was no demand, not from China not from the EU.

That's why I said it was a flop because, unlike a normal recovery where you start easily and gain traction, this started with fanfare, and for three consecutive months it sees downward pressure from both internal and external demand, this is just like in Japan where the government tries but people don't want to spend.


Unless something completely out of the ordinary happens there is nothing that can prevent that, the whole hyperinflation thing was simply blown out of proportions by the media and of course the Russian propaganda, right now I fear that we're heading into deflation and that would be far worse than a 2-3% inflation rate.

In the OP's argument and questions, there are a lot of implications to be drawn to give even a close accurate answer, the volatility of the current economy is highly unpredictable, even more so considering such an unstable benchmark for analysis as "the Asian giant"; however, there are certain aspects such as the possibility of a globalized deflation, and indeed demand levels in many areas have been significantly reduced by a myriad of factors, however, how bitcoin may react is something that may, as well as may not depend on events at the time of the peak of growth, however, the most likely is that it will do so positively and as it has already been demonstrating for several years, it will have a good growth, it is a highly reliable asset in terms of return on investment over a long period of time and the collective economic psychology has shown to appreciate this aspect throughout history.

If we look at the "factory gate" graph we'll see that a "producer deflation"  wasn't that uncommon in the past 10 years in China. Particularly between 2013 and 2016 they reached low levels. I think the current value can still be perflectly explained by the imbalances produced by the energy price and post-COVID shocks of 2021/2022, combined with higher unemployment (which is also mentioned in the article) as a consequence of the ultra-hard COVID restrictions. So I expect this indicator's value to go up a bit in the coming months. But maybe you're right and the CPI drops below 0% temporarily, although I think not more than for a couple of months.

For Bitcoin, I see moderately bullish times ahead. I think inflation will soon worldwide again reach levels typical of the 2010s (0-2%, with sometimes slight deflation), and not only in China. In some Western countries it already reached 2-3% or even lower (Spain: 1,9 %), while others are still lagging behind (Germany/France/Italy with >5%). So I expect the ECB, the Fed and other central banks to soon loosen their monetary policy. Of course in a recession/low conyuntural situation people have less money to invest but those that have will be willing to take more risk again.

And now for the "I told ya!" moment:

From the CCP newspaper:
China’s deflation risks rose in June amid weak demand, with consumer inflation flat and factory-gate prices dipping further
https://www.scmp.com/economy/economic-indicators/article/3227104/china-consumer-inflation-flat-june-factory-gate-prices-fall-further


Further reading:
https://www.ft.com/content/b684bf72-1aaf-46ac-9cc2-ea765395aa03
https://www.livemint.com/news/world/chinas-consumer-inflation-rate-slows-to-zero-amid-falling-factory-gate-prices-deflation-threat-lingers-11688954482120.html

Also, this is again interesting from a different perspective, a lot think that money printing equals inflation, but now you have the live example where even with money printing and stimulus China can trigger higher inflation despite wanting to do so!
With low demand hitting China and Japan pretty hard it's a matter of time till it spreads now backward to the EU and US like a reflection of the previous inflationist wave.

Interesting times ahead!

Each country's economy actually varies from region to region and is affected by a range of factors such as inflation, currency fluctuations, and resource depletion. As a result, many people now turn to Bitcoin as a means of preserving value and seeking potential profits in times of inflation or deflation. This is also an investment opportunity to accumulate as well as a desire to improve assets in today's difficult times. Trying to accumulate for a long period of time will be a great opportunity if the market turns back. So try to do well with bitcoin because it will be your chance to get rid of money problems in the future.

The moment you ask yourself why is somebody posting something it's the moment you quit being open-minded!
Sorry, but you're one of the last guys that can claim this here, look back at your own posting habits where you see only the doom of the Western world and the crumble of the US and the US dollars while you have no problem being a member of a campaign which, what as surprise has its payout pegged to the USD, not the yuan, not ruble not rupee, see the irony here?!?

So before asking yourself why is somebody spotting something you should actually check the post itself and criticize that if you find any flaw with it! And I have some news and update, specifically for you:

China’s exports plunge by 7.5% in May, far more than expected
https://www.cnbc.com/2023/06/07/chinas-exports-plunge-by-7point5percent-in-may-far-more-than-expected.html

How do you call facts in tinfoil land, oh yeah FUD!


I didn't create a topic to shoot down something, I created a topic about a complete proven beyond-a-word-of-doubt failure!

It seems that for the Chinese semiconductor market, they decided to take it seriously and for a long time.
This means that China's advanced electronics industry is CRITICALLY dependent on technology supplies from the US, Japan, the Netherlands and other countries. The reality is that China has not been able to achieve parity and development in order to produce critical elements on its own.

"Japan's new restrictions on exports of 23 types of semiconductor equipment and materials could have a profound effect on the Chinese microchip industry. They will become effective in December. Restrictions require special permission for export of these items to the country. There is a list of 42 "friendly" markets. China is not included in this list, so it falls under the new rules of Japan. Thus they regulate international trade in military and sub-military goods.
This is seen as a serious escalation in the global technology war between the United States and China.

"Japan and the Netherlands are poised to join the U.S. in limiting China's access to advanced semiconductor equipment, creating a powerful alliance that will undermine Beijing's ambitions to develop its own chip production. It is reported by Bloomberg, citing sources.
Officials from the United States, the Netherlands and Japan intend to conclude talks on new restrictions on what can be supplied to Chinese companies. According to Bloomberg's sources, there are no plans to publicly announce the restrictions, which will likely just be imposed."
https://www.bloomberg.com/news/articles/2023-01-27/japan-netherlands-to-join-us-in-chip-export-controls-on-china

"Japan will stop supplying 23 categories of chip-making equipment to China starting in July
Shipments of Japanese chip-making equipment to unreliable countries like China will be restricted as a result of measures taken by authorities in the Land of the Rising Sun. This was announced by the Minister of Trade and Industry Yasutoshi Nishimura in a press release. The moves are aimed at consolidating the efforts of U.S. allies to contain China's development, although Japanese authorities have avoided all mention of such specialization and influence."
https://3dnews.ru/1084318/yaponskie-eksportnie-ogranicheniya-na-postavku-oborudovaniya-dlya-vipuska-chipov-v-kitay-vstupyat-v-silu-v-iyule

As you can imagine, this will only worsen the Chinese economy...

OP, I cannot figure out if you are genuinely curious about the influence that China has on the US economy ..or if you are simply trying to protect the US economy? You recently also created a thread about the "Dedollarisation" attempts of the BRICS countries ==> https://bitcointalksearch.org/topic/m.62383862 to shoot down their efforts. 

Why are China such a threat to you? I am not from China and I do not support all their strategies... but I am open minded enough to see what they are doing and why they are doing this. The world are flooded by FUD about China and the BRICS countries to "Rule the World" ... I think the West are too focused on destroying their own economy.. than stopping this from happening. (Reduce Debt / Make better political decisions / reduce protective trade conditions and just grow the economy naturally) 

Well it's not just an assumption. And I didn't "hear" it but "read" it "somewhere" - some European media were full about these stories in the last months. The media reports are probably mostly based on a report by Allianz ("The Chinese challenge for the European automotive industry") from May 2023 which you can find here. And there you can read things like:

Source: Allianz report, p. 10

It seems also according to the report that the market share of completely Chinese carmakers is growing in their country as well, to the detriment of the "traditional" joint ventures with European companies.

The problem for European carmakers is that their big competitive advantage in the past and until the present is their experience with internal combustion engines, but EV production is radically different, and Europe wasn't very strong in this segment (even the US was better until recently). If EVs continue to advance, and this seems to be the case, then logic dictates that Chinese carmakers will continue to strengthen their position in the world market.

Problems in energy prices, production and export orders could affect the speed of the economy's recovery. In terms of the economic situation, a recession and a drop in demand can cause deflation or bankruptcy. As for Bitcoin and other cryptocurrencies, whether their value increases or decreases depends on the exchange between the buyer and the seller. If the market agrees that Bitcoin has value, the price will go up and vice versa. In terms of Bitcoin acceptance, there are efforts to ramp up marketing to bring Bitcoin into people's daily lives and independent of the monetary and economic policies of a particular country.
Increasing Bitcoin adoption rate will depend on the approval of businesses and financial institutions. Investing in Bitcoin needs to be carefully evaluated, but with its characteristics such as decentralization and security, Bitcoin can still be considered an investment vehicle worth considering in an overall investment diversity.

I'm sorry, but the opinion of a person LIVING in China, and receiving information from users of the Chinese auto industry, is more significant for me than your ASSUMPTION, built on the fact that "I heard it somewhere."
For example, I have not heard about mass purchases by Europeans or Americans, Chinese cars. I know that some European automakers have taken production there, and they produce THEIR cars for sale in the Chinese market. This is for example VW Id4.

You can also look at the safety testing of Chinese cars. Most of them absolutely do not meet, for example, European standards, which means they will not enter the market.

With which I agree that the quality has become better, against the background of those "tins" that the Chinese auto industry produced 10 years ago. But .. they are still far from real quality.
PS "Quality" in the automotive industry is a complex indicator, and not just a guarantee for the coating of body parts.

One man's misfortune is another's profit. In this case at least, if things do go for the shitter in the PRC, this may drive investors to find other countries to put their money on since production's not going well for the Superpower of Asia. (which I think is still an aftermath of the shitty stuff they did to their workers during and after the COVID-19 pandemic, not paying them, sometimes even locking their workers inside the factory so they can't go home, all that nasty stuff) Add to this the fact that they are having population problems because of the one-child policy finally biting them back in the asses, and the housing crisis as most housing developers default on their loans, China is definitely not having their greatest year, they may still put a facade that they're doing relatively fine, but the people know the truth.

As for bitcoin, I don't think there will be huge correlation in price between the two, bitcoin may increase in value but it's certainly going to be for other reasons. Same as with deflation, the USD will remain in this sorry state if nothing was done about the National Debt. So while this misfortune that befell China may urge investors and other business entities to switch over to countries, they still couldn't choose US because well, that country's suffering too.

Basically all of Europe, North America, some parts of South America as well, and Japan/South Korea. While there were economy slowdowns in some of these regions during that transition, nowhere they were catastrophic (Southern Europe could be the region most affected by this phenomenon, but even there I wouldn't describe the situation as "catastrophic". And in South America the economic problems have other reasons, basically the lack of long-term planning and drastic changes in macroeconomic policy which obstaculized the establishment of a strong industry.).

This is already happening, we have of course to add countries like Bangladesh. But it's a gradual shift. High aggregated value industries are concentrating in China now, and cheaper "level" industries already moved to India, Bangladesh, Myanmar, Ethiopia etc.. Industries are adapting in all countries constantly to these "reconfigurations". I don't see a point in time where this could lead to an extreme slowdown in China which would lead to a full fledged deflation. And India is also close to moving to a high-median age population as fertility rates are already almost on European levels, so they also have to prepare for a "post cheap labor" scenario.

I don't dispute what you wrote, but I think it will simply lead to a "normal" economic slowdown, as I posted before. Western Europe in the 80s/South Korea in the 90s weren't poor, and Europe had a particularly early, but slow transition to high median ages. Basically the "cheap labor" industries in China are already declining, and the "others" (high aggregated value) are already developing since several years, with a particular boost in the last 5. I don't want to mention only cars as an example, others are Bytedance/TikTok and Alibaba competing with US tech companies.

So in general I don't think why China shouldn't be "ready for that" while other nations in the 80s/90s were. I see a quite similar transition.

With your second paragraph (the well known marginal utility debate) I fully agree instead and this is also why I think there will be definitely a slowdown in China's economic growtn. My only difference with you is the magnitude - I think it won't be enough for a deflation; a new low inflation phase (like in Japan/Europe) is a more plausible scenario for me.

I think it is quite important that we need to reconsider when we hear the word "china", because whatever they do, they are not going to end up with anything that helps crypto in the slightest. I think it should be noted that we are talking about a nation that is a dictatorship, and crypto is a decentralized currency, which means that as long as bitcoin stays decentralized, china will always hate it because they can't control it.

There could be some coins that they create, and it will look like some regular Chinese person created it and not the government, but the government will be right behind them. Same happened with Alibaba and Jack Ma, dude was gone for so long and he was punished for being so freely spoken. It is vital to remember it is a dictatorship, that is very important.

You're comparing different timelines.
As a guy who researched Chinese population trends for decades said, "China has become older before it has become rich"
South Korea became first rich and then started hashing fewer children, Japan did it way earlier, China right now has the GDP per capita of Korea in the 94 and Japan in the 85, on par with the Western world in the 80s. So they still need to get way richer and then have a decline a decade later, but they started shrinking their population base way before that, it simply means there is little room for expansion without cutting part of the economy and switching aggressively to others, but with that, you lose a ton of advantages and China isn't ready for that.

Also, there is a limit to what high tech or whatever technology can bring to the economy, it's a limit for every human.
For example, when you're poor you wish you would have two tvs and two cars, go in every week to a resort, and so on. You realize your dream, everyone does, where is the room for growth from that point cause you won't be driving at the same time 4 cars, you don't need 10 TVs and you can't go in every week to 10 different resorts? Neither can you drink 100 bottles of whiskey a day now even though you can afford them.
We need 8 hours of sleep, let's say work will be done by just pushing one button for 1 second, then you have 16 hours in which you consume things and you use services, but that's all, there is a physical limit in which you simply won't need more, and that's why more and more economies are slowing down their growth, it's simply impossible to generate more needs at the same pace.

"A lot of countries"? I don't think it's a common phenomenon in the Modern Age, especially when the economies of the different parts of the world have gotten so inter-connected, that the loss of momentum in one region of the world could easily be taken advantage of by another region. India, with its growing population, could be in a position to take China's title as the world's manufacturer and source of cheap labor.


I respect your opinion, and you're probably right, but it's very debatable, and hypothetical. We haven't truly seen it in practice. Plus there's more to the narrative than labor and productivity.

As far as I know the quality of Chinese cars has improved greatly in the last years, so what your friend told you "a couple of years ago" may already be outdated. It's only the last 2-3 years I've seen good reviews even in European media. And of course this is mainly in the electric/H2 car field.

About increasing tariffs - I don't really believe in that; EU companies are dependant on selling their products to China, so they won't risk a "customs war" like the US is currently willing to risk.

I also don't believe in the theory of the demographic bomb mentioned by others here. There are lots of countries who managed a transition from a society with a low median age to a high median age without major problems. It can be an element lowering economic growth for some years but I believe it won't be dramatic. China (and Asian countries in general, also Japan, Korea etc.) are also known for being quite aggressive using productivity-boosting technologies, for example high tech construction methods with few human workers, or also technology used in care of the elderly, and AI will even improve this situation.

Yes that's right. actually our little world in crypto is just like our real world and we have cycles. the problem is that goods and services are cheaper when produced on a large scale. if the scale of sales and services decreases, then the price of goods and services feels more expensive. so companies want to cut spending because sales of goods and services decrease so the bank know what come next and they don't want to go bankrupt first

During a deflationary period, when the general price level falls, the demand for goods and services can decrease, leading to a decrease in economic activity and the possibility of job losses. Basic and essential goods often continue to be in demand, while non-essential goods and services may experience a decline in demand. So when people learn about bitcoin, they see it as a store of value and a potential long-term investment. Bitcoin's limited supply and decentralized nature have led some to see it as a hedge against inflation and currency devaluation. In times of economic uncertainty, people may seek alternative assets, including cryptocurrencies like Bitcoin, as a means of preserving their wealth. This can be a positive move for investors in the market.

China is private land on the earth which does not exist and it was put their by aliens. Lolz.
They have sadly made lot of amendments while giving decisions regarding the use of Bitcoin. First china was doing full fledge mining and most of the ASICS were manufactured there only. They were on right path of Bitcoin Future / crypto as whole. They were having lot of employments in the mean time but they drifted, banned everything related to Bitcoin and rolled back the business into losses.

China should not be considered as serious continent when it comes to doing the business. They say Chinese items/promises can either last until the next block or may be until the moon, but you wouldn't be sure of it until you try.

In similar ways, the deflationary future isn't a solid promise. Nothing relies on one continent if we are talking about decentralized asset that is available throughout the world. With China anyway not in support of Bitcoin, there seems null effect on the Bitcoin and its future.

In the fiat world, what makes a World Reserve Currency is the demand for that currency, and nothing compares to the U.S. Dollar in Saveability, Liquidity and Investsbility. It's like a license to print!


Plus the problem can't just be solved easily by changing the One Child Policy to their current Three Child Policy because China has a gender demographic problem as well. There's an imbalance in ther male-to-female ratio towards more males in the population. That means less child-bearing people available besides the low birth rate of their females.

You can google those definitions yourself, I don't feel like copy-pasting basic definitions from wikis after you bragged about knowing them that well.

You said that money printing needs to stop before we see deflation, I told you that's not mandatory.
Here is a paper on deflation in Japan:
https://www.bis.org/publ/work188.pdf

Deflation was possible despite rates being 0 and despite the M1 growing 15 times since 1985.
/end of the debate


It's the opposite, you have described inflation, deflation brings down the value of goods which makes loans unattractive since you're borrowing now money to buy stuff that will be less expensive in a few months, so rates will go to zero or vene below in case of deflation.


It's already happening even now:
https://www.wionews.com/world/russia-does-not-know-what-to-do-with-147bn-in-rupees-it-has-amassed-599540

it's nice trying on dealing in shitcoins you can print endlessly, too bad that nobody wants your shitcoins! 

As for China's demographic bomb, it's in the making but it will take time, it needs a full generation to actually show effects, and it will begin when the ones that are right now in their 30+ will reach retirement, according to their own 2010 census, they had 127mil in the 20-24 (now these are 33-37) area only 74, 70, 75 millions in the 0-4,5-9,10-14 groups.
That's a 40 million workers gap nobody will be able to manage!

It's probably because China has been the most aggressive in locking down their country during the pandemic. Plus the above average growth their economy was only made possible through the above average growth of their national debt. It is not sustainable.


But it IS far worse. China is going through a population implosion caused by decades and decades of their One Child Policy. In time, there won't be enough young people to tax to take care of their retirees.


During times of deflation, fiat currencies like the Dollar become more scarce, it encourages people to save more/spend less, then therefore its value goes up.

- Because Bitcoin's value is obtained against the Dollar, then Bitcoin's value goes down. I believe a golden opportunity for HODLers.


Probably just a "period of deflation" before BRRR-Money Printing by the Cabal, https://bitcointalksearch.org/topic/prepare-for-deflation-in-2023-5433243

There's also BRICS. If China implodes, BRICS nations will be playing a game of hot potato, ready to drop each other's fiat currencies.

Appreciating your insight, I'd like to build upon your understanding and correct some misconceptions. Your definition of interest rates is quite on point. They act as a lever to control inflation and deflation. But, the relationship between interest rates and inflation or deflation is not always as direct as you've presented.

For instance, low interest rates typically stimulate borrowing and investment, which could lead to inflation. But in periods of economic downturn, this might not always work (a situation economists call a 'liquidity trap').

Conversely, deflation isn't a result of high-interest rates. It's typically a symptom of decreased demand in the economy. High-interest rates could encourage saving, thus reducing spending, but the correlation between high-interest rates leading directly to deflation is not well-founded in economic theory.

The interplay of these factors is complex, often influenced by a multitude of other factors. Monetary policy, fiscal policy, global economic conditions, and even psychology all play a role in this delicate balance.

Interest rates can be said to be a major influence in the occurrence of inflation or deflation. When interest rates are low, inflation occurs, because individuals and companies borrow money from banks at a low interest rate and then pump it into the markets in the form of purchases or investments, and because the return on deposits is weak, they do not prefer keep their money in the bank.

While deflation raises interest rates on loans, which makes investors and companies not prefer to take loans from banks for their investments because they are high, while individuals prefer to put their money in deposits because it gives a greater return, and this causes weak spending in the markets, which makes commercial activities not find buyers. for its goods.

From here we know that deflation is the opposite of inflation, i.e. it is a decline in the prices of goods and services as a result of weak demand for them, as the value of money rises in exchange for the decrease in the value of goods, and this leads to economic recession and an increase in the unemployment rate.

The causes of deflation are usually the result of an excess availability of goods or weakness in purchases, or due to a rise in the interest on borrowing.

I do not know if I made a mistake, but I spoke in last post about a case that exists in my country. So please correct me if there is any mistake.

i still don't know what do you mean.

so you know how economy work right? i want to ask something. what is interest rates? and what is the relationship between deflation and inflation?

I think that deflation has already begun in many countries and other countries are rapidly heading towards the same thing. This is a natural result of declining resources, high inflation, the huge increase in fuel prices, and the worst is yet to come.

Here in my country, for example, because of inflation and the loss of the value of the local currency, deflation occurred, so the demand for many commodities decreased, and many professions stopped as a result of the decrease in demand. There is only a demand for basic and food items.

As for the price of bitcoin, I think that the effect will be positive because many people tend to buy bitcoin because they believe that bitcoin is a store of value. They also believe that it is a profitable investment in the long term, so it is expected that the continuation of inflation and deflation will lead to continued demand for bitcoin and the continuation of its price increase in the long term. .

This could be the scariest thing I've read on on this forum since I got on here, imagine giving birth to children just for the sake of the country to be able to replace old workers in many countries, this was why the government gets mad once they heard that people now have a way of making a living without working for any government, this is slavery in disguise to be honest.

This could also be the reason why we are never taught in school about how to make money, if everyone knows how to make money who is going to run the government businesses and companies? It's a crazy world for real...

It's like telling the world to create more babies 👶 for working purposes, damn.

The complete misconception is that an increased money supply will always trigger inflation!
Japan is the perfect example of why this doesn't happen if you don't have consumers spending that money.

Let me give you a clear example
- the government throws $1000 at everyone, every single citizen rushes to buy stuff, consumption doubles, there aren't enough products on the market so obviously prices go up as we have seen after covid, we have inflation
- the government sends $1000 but every single citizen deposits this in the bank. There is no increased consumption, there is no imbalance in the market, there is no extra demand, so there is no inflation!



Before the spike in energy prices that was Japan, they are actually welcoming this inflation right now cause they have tried to trigger one unsuccessfully for a decade, for example, the BOJ is still keeping interest rates at 0% even now.


China is deeper in debt than the US. And China can't print $.
https://www.bloomberg.com/news/articles/2023-05-08/china-s-debt-to-gdp-ratio-rises-to-record-279-7-on-credit-boom

Namely, American companies are leaving the Chinese market and moving production to neighboring countries, including Vietnam, India and others. And this is a real problem for the Chinese economy.

With regard to Chinese expansion into Africa and neighboring regions, this is a real enslavement of countries. A "beautiful" example is Sri Lanka. Read how the country slipped into the state in which they are now. "Chinese investment", it will soon become a household name! Their goal is not the development of some segment of the economy, but the draining of all resources, and the transformation of the country into their financial, debt slave. Despite China's very long history, China has never been able to become a "civilized" investor. They choose a very harsh policy in relation to the country where they invest... I can write a lot on this topic, but anyone can find many examples of what such investments lead to.

This problem will not only affect China but most countries in Europe, Asia, and America that are suffering from low birth rates. Most of the labor force is aging and the youth are not so much interested in raising families because these birth control policies have changed the mentality of most baby boomers to have just one or two or no children. The current economic problems are not also helping matters because most people might not afford to finance a family. The effect will be that industries will have to rely on immigrant or foreign workers to function.

Sensing the danger ahead most countries such as Russia, China, Italy, France, Sweden, Japan, South Korea, etc are paying families to have more children. South Korean government is even willing to bear the cost for everything about pregnancy, including babysitting service cost and even the cost of dating to get pregnant. Meanwhile developing countries in Africa, Asia, and America are promoting birth control measures because of overpopulation.

1. no, if we are heading to deflation. prices of goods & services must be going down.
    if we do that the bank must reduce the money supply and they should raise bank interest rates.
2. BTC will go down if stablecoin fall just like luna

Regarding the possible influence on Bitcoin's price, it is true that due to its restricted quantity, Bitcoin has sometimes been seen as a hedge against inflation. However, it is critical to note that the price of Bitcoin is affected by variables other than macroeconomic conditions, such as market sentiment and regulatory changes. While the prospect of a deflationary phase may cause alarm, it is critical to have a balanced view and assess the larger economic environment. Diversification is key for making educated investing decisions, as is comprehending the inherent risks and volatility of cryptocurrencies. Anyway, thanks for giving this useful knowledge.

Is there any country in the world today that is experiencing deflation in this era that we are facing? Doesn't it seem like nothing? almost all countries are still facing inflation. Now, what the U.S. did that some thought would be paused has not happened yet. Maybe because the U.S. still doesn't think it's that high and maybe they still think everything is under control, that's what I see.

But the truth in my eyes is not. And if I compare it with China, the situation of both of them is quite far. Because the U.S. is deep in debt and the inflation in China can be said to be under control in my opinion and observation. There's only one thing I'm sure of if the inflation average continues to rise, even Bitcoin's value will surely be dragged down.

I've watched a video some time ago about China that explained that things will go badly for it economically due to childbirth policies. So at first China encouraged families to have many children, and that really helped after some time because of all that youth entering the workforce. But then the population was growing way too fast, so China started harsh policies to limit the number of children to 1. It sort of helped with the population growth, but again, China overdid it, and when the policy was abolished in 2016, it was already too late. I don't know if the current situation is already the result of unsteady population policies, but if not, it can become an issue later and have even more negative economic impact.

Still, I don't think the world is generally heading toward deflation.

Losing some parts of the US market was a major blow to the Chinese economy. The political dispensation of Donald Trump witnessed a rise in the relocation of major US companies from China back to the US or to other countries that share the same advantage like China. Many American firms moved to Chinese neighbors like Vietnam. This doubtlessly led to unemployment. But because of national pride and state control of media the problems of China are kept secret. But gradually the true situation of the Chinese economy is unfolding.

But China has started seeking extraordinary solutions. They have started expanding their partnerships in the Middle East, Africa, and other continents.
In Africa, China is using loans, infrastructural investments, and other financial partnerships to hold mostly rich African nations captive. China is the biggest bilateral creditor to Kenya, Angola, Republic of the Congo and the largest lender to Côte d’Ivoire. Although their investment and lending power have reduced this year at least they account for 12% of Africa's external debt.  

Although these investments or partnerships will not be compared with the US trade services trade deficit that China enjoyed before the anti-China trade policy by Trump but are they gradually diversifying the Chinese export market.

The Chinese car industry is a good example, but... I am absolutely sure that this will all end with the introduction of additional duties on Chinese cars, which will cross out the benefits of buying them. The EU will protect its market, as the EU car industry is one of the most important elements of the economy.
The second side of the Chinese car industry is Western technology, without which there are no production lines or high-quality implementation of car functionality.
I have a friend who has been living and working in China for a long time. He is connected with the state sector in the oil and gas segment. And a couple of years ago when they started to appear fantastic reviews of Chinese automobiles I asked him a question. The answer was: yes, we have a huge number of manufacturers both for the domestic market, and for local markets (South Asia, Africa, South America) and for export to the "big league" countries. Nominally they meet the requirements, but in reality... The quality is far from perfect, or even to today's level of middle class European cars. Many people in China buy our cars only because of their availability, those who have money buy American or European cars. This is quality. I myself drive a European car (he has his own Mercedes).

China, if you look at its activity, in the last decade has a strong emphasis on "enslaving" markets in Africa, Asia, and Latin America. China is well aware that it is not welcome in the U.S. or the EU. And most importantly - China has lost its former key advantage - cheap labor. The level of income in the industrial, highly developed and competitive segment of Chinese production is certainly not comparable to the salaries of Europeans, but it has become significantly higher compared to 10 years ago. And this, as you understand, affects the cost of production and competitive advantage. Plus Europe understands that by supporting their own manufacturers, they can survive, so they consciously choose European goods. And this trend will develop.

I think there is a certain probability we'll reach a zero-inflation to slight deflation scenario in 1-2 years. But not exclusively due to China's problems and the worldwide weak economic moment. Energy prices may go downhill permanently and steadily from now on (with some hiccups of course), and that will lead to downward pressures in all markets closely related to energy.

The influence of inflation to Bitcoin prices is a bit "paradoxical". As others wrote, Bitcoin is marketed as a way to protect patrimony from inflation. So you would estimate that it could react negatively in a deflation.

But in the past Bitcoin did generally really well in low-inflation/deflation periods. The reason may be quite obvious: in deflation periods the central banks reccurr to QE and other "money printing" solutions and to low/negative interest rates to boost inflation to ~2%. This leads not only to "free" money flowing into Bitcoin, but also to Bitcoin being seen as an alternative to low-interest traditional financial products. While in inflationary periods it's the opposite: markets are drying up and BTC is negatively affected.

However that is also not the whole story. In countries with really high inflation (let's say more than 20-30%/y, Argentina is the prime example), Bitcoin is also doing exceptionally well. If you invest in Bitcoin in these countries, you will win even in bear markets (if you don't invest exactly at a bubble top, perhaps) compared to holding fiat. For example, in Argentina inflation is 100-120%/y (and currency devaluates to a similar pace), but bank deposit interest rates are around 80-90%/y. This means: If BTC/USD loses less than 20%-30% per year you win even against a bank deposit. This means the risk investing in BTC drops seriously in these countries - in the absolute worst case (~65% drop like in 2022) you're still not losing much against simply holding cash.


So I guess the mechanism is:
- Very high inflation: Bitcoin price tends to go up, because even a downtrend price still is better than national currency.
- Moderately high inflation: Bitcoin tends to go down, because of the restrictive central bank methods (high interest rates, no more QE)
- Low inflation or deflation: Bitcoin tends to go up, because of the tendency to a high fiat money supply growth, and the attractivity against low-interest traditional financial products.


Europe, and most of the rest of the world (by the way: 50% is not true, its ~16 % (2022)). Chinese state and corporations are investing heavily there to penetrate the European market even more. The most notorious example is cars - Chinese carbuilders are building up a strong position in Europe. They may soon get a similar position to Japan and South Korea, with expectations to grow even more.

However, I think that China's growth rates may really enter a (temporary) recession now due to short-term economic policy errors, and in the long term reduce sustainably, i.e. staying largely below ~5% and approaching 1-2% in most years, because it's becoming a stable industrialized economy and there are less opportunities to cheaply catch up. But I also don't see really a catastrophic outcome, even if some seem to desire this. Their internal market is probably strong enough to survive all external crises.

People who invest in Bitcoin expect performance that is orders of magnitude higher than inflation, while those who only seek to hedge against inflation can even be satisfied with breaking even against inflation.

You can see it in this forum too - the discussions are focused around whether Bitcoin can reach $100K or $1M, or $10M in 20 years - no one here insterested in 2-3% growth per year.

Unfortunately, I cannot agree with you .. For one simple reason - China, over the past 2 years, has not made a single REASONABLE decision. Moreover, over the past 2 years, after the change in the vector of development, to the vector of totalitarianization and politics and economics, there can no longer be REASONABLE decisions. Everything that is being done now is not a very successful attempt to delay the collapse of the economy, not the most logical moves. Although .. I agree - the expanded virtual "de-dollarization", under the guise of which they launched the "yuanization" of the unfortunate supporters of this idea, will lead to a temporary "stabilization" of the falling economy. I am sure that it will be possible to slow down the collapse of the economy a little, but to solve the problem - no. The problem is secondary - attempts to cure the "seriously ill organism of the Chinese economy" will lead to "infection with the problem" of those who become supporters of "yuanization". China, with a non-zero probability, will be able to, if not solve the problem, then mitigate its consequences. And those who chose the path of "de-dollarization / yuanization", for many more decades, will suffer from this rash step ...

i believe that we will lead to deflation, but of course the level of deflation for each country will be different, because it is related to their economic and foreign policies. even though in the future the deflation of a country, for example America, will have a domino effect on other countries, it will not have a significant effect on other countries, unless the country is completely dependent on America. so we're right into deflation, but it's not as scary as one might think.


it depends, it can have a good impact on bitcoin or not. it will have a good impact if during the deflation, people short sell their stocks or bonds and transfer them to bitcoin to get better profits. or they will sell their bitcoins to be able to secure the value of their investment, which will have a negative impact on the price of bitcoins. all possibilities will happen, but i hope in the first possibility.

Don't force yourself to write four mandatory lines if you don't have anything to say!


In what dimension could a continuous ban from China be a positive thing?


This is not about HK it's not about their laws regarding Bitcoin but about the whole Chinese economy that is starting to suffer right after the most anticipated economic event in the last years, it's roar back from the lockdowns, which turned into prolonged suffering.
HK laws or HK acceptance are a speck in the global economy if China's output drops further, it's like comparing 10 guys going to Salvador beach with the FED rising rates, two things different by orders or magnitude.



He can still be correct.
A true hedge against inflation must work at every single moment, if inflation is 50% a year next year it must be worth 50% more, if inflation goes 30%,40%, or 50% it must follow this by at least the inflation rate to keep being a hedge against it because you need it at every single point in the future to preserve the value.

A long time investment doesn't need to follow these steps, it can go down in value by 50% next month and can linger there for years, as long as in 4 years it goes 10x it has earned you profit even against inflation, but with a difference, it hasn't been able to do this for every single day. So if you're out of luck and you need money you're going to have to sell it at a loss before the spike, and that's not really protecting you from inflation one tiny bit.

Thinking backwards a bit, what if they continue to oppose bitcoin? And this story turns positive or negative for the crypto market, what is happening is reflecting, I don't want to talk about news stories that validate the price line, but positive changes. for the crypto space is always well received and responded. There will be those who see this as an opportunity and there are also those who see the risks of the problem, but those are the things that always happen not only for the crypto market.

 I think its too early to say the market didn't change when the Hongkong start. Some are saying that it will need 6 months to see the effect in the market.

They were cl armthat June 1 is just the start of reviewing international exchanges to be approved to operate. This is only in Hongkong though, I don't think Mainland people are already up buying every coins they see in the market. 

To address inflation or achieve deflation, governments and central banks typically use various monetary and fiscal policies. Reducing the money supply is one way to combat inflation, but it is a delicate process that requires careful consideration of the broader economic implications.
but i think its impossible, because since the first government already have debt and its only just buying time until the number continues to grow.

Here you contradict yourself. Buying things that will be worth more in the future is the way to hedge against inflation, as long as the percentage increase exceeds it.  In other words, if cumulative inflation over the next 4 years is 20%, the assets you have that equal or exceed that 20% in cumulative return have served to protect you from inflation.


I do not dare to give a categorical answer, but I would say that brief periods of deflation are not all bad, they reduce the overheating of the market, which cannot live in a permanent bull.

Since the 2008 crisis, there have been a couple of periods of deflation in Europe and, like everything else, the bad thing is that deflation is prolonged or very pronounced, but if it were to happen now we could see it, optimistically, as a prelude to the next bull market.


In the short term, anything can happen. In the medium and long term the price will tend to continue to rise, although I think less spectacularly than in previous cycles in percentage terms, and even if we are in deflation it would be expected that the printing presses will go back to full steam to try to stimulate the economy and much of that money will go into financial assets, including Bitcoin.

I don't think a lot of investors buy Bitcoin because they believe it will protect them from inflation, it's just a narrative for promoting Bitcoin. The actual reason is that people believe Bitcoin will be worth more in the future and they will dump it when it will happen, and with their action of investing in Bitcoin they turn it into a self-fullfilling prophecy. This is why we have these bull-bear cycles.

Deflation could have some negative effect because people would be less genuinely interested in Bitcoin's anti-inflation, but we might not even notice this effect because it will get overshadowed by Bitcoin's bubbles.

China always come up with a solution although the solution might be abit on the extreme side. The difference that China has compared to western countries is that they dont really have to deal with massive debate over a solution as long as it served a good purposes on the country's economy issue because of the communism principle



Gotta factor in the deflation as well so we could be lucky if we get to around 60k though

You're mistaken things, industries will not move to other countries when there is no demand for their goods in the first place, neither local nor exports, industries move because of favorable locations and low wages and!! because of demand there. Not the other way around.


Just as much as the gate to hell opening will mean a lot of devils will buy into Bitcoin! Seriously? China and Bitcoin?


Deflation sounds good on paper, in reality, is a nightmare!
You think only of your current wage and how much you can buy from it monthly but deflation will sap n t the value of all your assets, your house will be less, your assets will be less, your stocks will be less, and everything you own will be worth less than before.
It might sound good if you live paycheck to paycheck but in reality, not even there it's all rosy!

It's always the dream of the economies to move towards deflation, but the reality is quite different from a dream. In current situation I don't think that we are yet heading towards deflation and even I think that we might have to face another phase of huge inflation if things continue this way. The US economy might face huge challenges in coming months and as a result the inflation can vary in ranges. The situation isn't that bad in China and they still have good control over inflation in their country.

I think the price of Bitcoin will be impacted in a good way because most of the investors will transition from fiat to Bitcoin and that will mostly cause an increase in its value. The adoption rate will increase in coming months and of course the halving event isn't that far away now and with that the value of a Bitcoin could be anywhere from $80k to $120k, and the investors who put money into it right now will have good ROI. I'm hoping that within 2 years the growth of users who will somehow transition to Bitcoin will increase drastically and the change will be really positive for the crypto-currency and its community.

Now real inflation is XX% in the US and Europe, but since countries are constantly changing their calculation methods, it is less in the tables. In many countries, inflation is XXX%. To achieve deflation, governments need to stop printing money, which is impossible to do now. If the bankers reduce the amount of money in the economy, then this will be done in order for large companies to buy out smaller and medium-sized companies.

If state capital like Beijing one of the major cities could be affected to this rate i wonder how other rural places will be so affected to an extent, the problem with China is it's over dependence on itself, in this life, there's no how we will not need the role or help of each other for survival at some point in time, but China undermined this and thinks it's self sustainable well enough with it internal economy


I will personally preferred the deflationary consequences on the economy than having inflation which has been a consistent reoccurrence in most economic settings, but the issues with deflation is that the government got affected than in inflation where the people are the ones affected most, we cannot do without having the encounter of either of the two in a standard economy, but in place of China, if it has developed a racial economy ties with other countries in collaboration, the rate of this consequences would have been reduced oner going deflated.

IMO, China reopening is a big step in increasing the acceptance of cryptocurrencies like Bitcoin. However, this is a lengthy process and there may be some setbacks along the way. In terms of deflation, Bitcoin has some advantages in that it works without central bank money printing and the remaining supply is limited. However, some experts say that the increase in the value of Bitcoin also contributes to the disruption of deflationary efforts.

When investing in Bitcoin, you need to carefully consider and understand the risks and benefits of this currency. If you want to invest in Bitcoin or any other cryptocurrency, I suggest you do a thorough research on it before making a decision.

I think the inflationary pressure on most of the Fiat currencies will still outweigh whatever price reduction is recorded in commodities. And don't forget that the industries or attentions could move to least affected countries to fill up the demand gap. That could force China to take a different approach to keep their jobs and industries.

Bitcoin is actually more deflationary, and it is new, unique and developing... with potential to attract users to other of its interesting features aside just the deflation. Notwithstanding, its deflationary feature will continue to be more attractive to users especially those trading on volatility

Let's just say this is just the beginning. The problem with the Chinese economy is that it:
1. At its core, it is based on the production of consumer goods. Then the truth was added high-tech "toys"
2. Export-oriented
3. Has hidden internal problems
4. Doesn't adhere to "international norms"

All this leads to:
1. The domestic consumption market is falling, which means that production is declining. Further, you can write a lot more, but you yourself understand what chain of problems is starting
2. External consumers, who brought strong currency to the treasury, also reduced the consumption of Chinese goods. And here is the most difficult. Firstly, the United States took the vector to:
- stop supplying high-tech solutions to China
- move high-tech production outside of China.
- to the extent possible to recreate the production of high-tech products in their own country.
And this is a huge and yet unsolvable problem for the Chinese economy. Who will replace more than 50% of exports? India? Russia ? Iran? Do they have dollars? What about technology? NO one or the other!

So now we are seeing only the "tip of the iceberg", and within 2-3 years, if China does not come up with an extraordinary solution, we will actually see the decline of the "Chinese miracle".
Yes, despite the fact that "the second economy in the world", "the largest country", "the largest population" and "de-dollarization and the transition to the yuan" ...

Had to chop the title so it really sucks but I can't do better right now!  

With everyone focused on the debt of the US, the freezing Europeans, yeah lol, there is some really bad news on the horizon and for all sides in this game. If a slowdown in the Western world could be explained by jumping energy prices last year, prices that have since gone down to 2013 levels when it comes to pipe gas, in China manufacturing is dropping right after the reopening, at a continuous pace and despite the downturn in both raw materials and energy prices, copper, coal, iron, steel, wheat, everything is sliding with the PMI alongside.

So, to not be biased and using only the English version of the mouthpiece of the Chinese government:

China’s factory activity growth falters in March due to weaker demand, slowing production
China’s factory activity dipped in April on weak demand as bumpy post-Covid economic recovery continue
China’s official manufacturing purchasing managers’ index (PMI) fell to 48.8 in May from 49.2 in April

And things get worse, remember this is Chinese information, so take it with a grain of salt since it might be far worse:
So no manufacturing so now jobs for the not qualified, no jobs for the young ones that have finished college, which is a different area, and this can lead only to one direction.

If the economic slowdown is present everywhere, China and the Western World, manufacturing is affected on all continents there is only one culprit in sight, and that is demand destruction, and with this, there is a chance we might end in a deflation period if things don't change.
There is simply no demand, and with no demand, there are two choices, prices going down, which means obvious deflation, or bankruptcies which I doubt anyone is that stupid to do before trying the first solution, but the first choice is pretty hard to do when you just had an influx of free money and the rate rises have not yet started to be serious enough.

There is an interesting piece on this from Forbes:
https://www.forbes.com/sites/greatspeculations/2023/05/13/more-proof-deflation-is-the-future/
of course, it's just an opinion and I will from the start warn you it's a bit speculative even with the data presented but it ends with the same warning as many others on the incoming deflation, although their take on what to do and what next is really not my cup of tea.

Now, slowly turning from this to Bitcoin.

Bitcoin was mainly designed as a p2p way of exchanging and transmitting value, due to its limited supply it turned into a way of safekeeping your wealth and further down the line evolved into an investment!
Now, assuming all the required stars align and we really head into a deflationary period for fiat currencies, how will the price of Bitcoin react, since this is the only thing that can be affected by the economy, the rest, the p2p payments, the cold storage, the be your own bank will for sure not be affected, but lately those are of less interest and the focus is on the price most of the time.

For sure, Bitcoin has the required advantage to erase all fears, that is adoption, unlike other commodities it can still attract users, and since I don't really believe those hundreds of millions of users quoted by most sources right now I can safely bet in my mind an x10 adoption rate would be doable at any time from the current moment. But, the question is, will it happen in this short span with enough traction?

So, to make this long story short, two simple opinions:
- do you believe we're heading to deflation?
- how do you think the price of BTC will be influenced if we do so?