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Is Amazon Lowering The Global Rate of Inflation? (businessinsider.com)
An anonymous reader quotes Business Insider:
Another investment bank analyst has signed on to the idea that the internet is holding down the rate of inflation. Bilal Hafeez, the global head of G10 FX strategy and head of EMEA research at Nomura, published two notes last month on whether the value of the dollar was being held down by Amazon and its ilk. In one note he called it "the Amazonization of inflation"... [O]nline commerce typified by Amazon is making the supply and distribution of goods so cheap that "Amazonisation" itself is now a deflationary force at a macro level, Hafeez argues. He writes: "While globalisation was the meme of the 2000s, this decade's has to be the 'Amazonisation' of commerce. Given the bulk of the cost of goods is distribution costs, Amazon's unique distribution model and widening range of products could impart a new disinflationary impulse on goods prices."
This idea is becoming more popular among analysts as the months roll by. Back in September 2016, we told you about the "Spotify problem," in an interview with HSBC's James Pomeroy. His theory is that the internet allows consumers to shop around and compare prices incredibly easily. It also substitutes cheap digital goods over more expensive physical ones. For instance, people stop paying £20 every month for a CD when they start paying £10 a month for endless music from Spotify. The result is that businesses are aggressively driving down their own prices because consumers simply won't go to the ones that charge more, and are no longer trapped into shopping in their own neighbourhoods. Sweden is so advanced as a digital economy that it may be importing its own deflation via digital shopping, Pomeroy argued.
This idea is becoming more popular among analysts as the months roll by. Back in September 2016, we told you about the "Spotify problem," in an interview with HSBC's James Pomeroy. His theory is that the internet allows consumers to shop around and compare prices incredibly easily. It also substitutes cheap digital goods over more expensive physical ones. For instance, people stop paying £20 every month for a CD when they start paying £10 a month for endless music from Spotify. The result is that businesses are aggressively driving down their own prices because consumers simply won't go to the ones that charge more, and are no longer trapped into shopping in their own neighbourhoods. Sweden is so advanced as a digital economy that it may be importing its own deflation via digital shopping, Pomeroy argued.
Science and technology are lowering it. We are slowly going to have to face the fact that our economic and social models are obsolete. We will have to accept that not everyone needs to work and we are in an ocean of abundance, but forcing each other to operate as if it's the Bronze Age.
As usual, it's not the countless scientists and engineers that designed and built the machinery that allows this abundance, instead, we focus on one person who had nothing to do with it, and he gets all the credit.
* Transit fares have gone up continuously; e.g. https://globalnews.ca/news/235... And pennies have been withdrawn from circulation in Canada
*A new 1974 Ford Maverick, V8, automatic transmission cost under $4,000 in Canada, and probably around $3,000 US. Try getting a 2018 Ford Focus for under $20,000 today.
* Food prices have kept rising continuously
* Rents and housing getting unaffordable here in Toronto
* Cable bills keep shooting upwards, which is why "cord-cutting" is now a thing
* A new 50 inch plasma TV was $3,500 in 2007 dollars. Today a 50 inch LED TV can be had for $300
* A basic IBM PC with 640 KILObytes of ram, 10 MEGAbyte disk drive, and 320x200 siaplay CRT came in at around $5,000 in 1983 dollars. Today's $1,000 machines walk all over it.
Problem... you can't live in a PC or TV; you can't eat a PC or TV; you can't ride to work in a PC or TV. The upper or upper-middle class are better off today (what's left of the middle class, but that's another story).
Meanwhile. a lot of ordinary people, especially those in minimum wage jobs, have extreme difficulty paying for basic necessities. Is there an inflation index for necessities, i.e. food/shelter/clothing and transportation? And by transportation, I mean local stuff. A flight to Hawaii might cost less today, but the average person is more worried about commuting to work, and getting around town.
I'm not repeating myself
I'm an X window user; I'm an ex-Windows user
I save time by cooking at home. If I were to eat out every meal, I'd be wasting a ton of time fighting through traffic and waiting in lines, three times a day. I'd also be getting sick because those restaurants are never perfect at hygiene. I've never had food poisoning from a meal I prepared at home, but when I eat out, it's a bit like rolling dice.
With a garden in my backyard, a lot of my food doesn't even need to be cooked -- cooking is a crutch for people eating tough store bought foods that aren't young, fresh, and tender like what I get out of my garden. Plus, I don't have to wait in any lines to "check out" from my garden "grocery store."
Next, I learned about composting my food wastes, which REALLY improves the cleanup efforts of stuff that used to take forever to cleanup manually. It is SO much easier to take my dirty cutting board outside and hose it off at high pressure over the woodchip compost pile than scrubbing it indoors where anything splashing ends up creating potential cross-contamination and more cleanup work.