this post was submitted on 05 Feb 2024
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[–] hark@lemmy.world 2 points 9 months ago (1 children)

Thanks for all that information! The point about deficit spending in particular was something I had a vague idea about, but seeing the numbers on spending vs GDP change is very insightful. The US has a huge advantage with its top reserve currency status. I do wonder how isolated the US is from China's problems. It seems like so far it hasn't had much of an impact on the US, but it's hard to imagine failures in the second-largest economy of the world not having some sort of domino effect.

[–] empireOfLove2@lemmy.dbzer0.com 1 points 9 months ago* (last edited 9 months ago) (1 children)

I'm not super well versed on the financial interactions between the US and Cjina, but I imagine the total US change will be a washout. The financial markets will dip for sure since many US based companies do massive amounts of business in China, but a Chinese stagnation will also drop the bottom out of the prices in all of the commodity markets that drive a lot of price inflation in the US. Cheaper US industrial/energy inputs means inflation drops and consumer spending/corporate capex can increase.
That's just a guess though, because China had also been rapidly developing ties to every other country outside of the West-centric financial bubble, and if those countries also see a contraction in Chinese investment, it could snowball a bit.

[–] hark@lemmy.world 1 points 9 months ago

Will drops in commodity prices show up as deflation or will that just mean greater margins of profits?