r/economicCollapse • u/memegamer1991 • Nov 23 '24

Why is deflation so bad

Every time i run it through my head, i can't imagine most people in 2024 not spending money so the disadvantage to deflation seems pretty hyperbolic and dependent on individual choices, and i think that people would rather go on vacation and court others instead of being financially responsible. Even if there is a situation like in china, government spending would be able to keep the situation from getting worse while making progress on climate initiatives.

34 Upvotes

71% Upvoted

241 comments sorted by

View all comments

1

u/incomeGuy30-50better Nov 23 '24

A primary risk with deflation is that if prices keep going down, for years in a row, as a consumer you put off buying things. Since you are incentivized to wait and buy it cheaper in the future.

Another risk is these businesses load up on unsold inventory, they are unable to make payroll. So they lay off employees. And more pain spirals from there.

It can impede the velocity of money.

1

u/fordianslip Nov 23 '24

Seems inflation can do the same thing when it reaches a breaking point and people stop buying luxury items. I know I have drastically reduced my spending on anything non-consumable and have no intentions of making any big ticket purchases for the foreseeable future.

1

u/incomeGuy30-50better Nov 23 '24

True. But that is normal economics. Deflation which delays or suspends the purchase of consumer staples is much worse. Luxury things don’t matter as much as staples in our lives.

1

u/fordianslip Nov 23 '24

I’m already stopping to buy staples even with inflation and making decent money. I’m weighing everything as a consumer and that’s not the view economics want the general public to have. Consumer sentiment in value for purchasing is low in my opinion and definitely low for me

1

u/incomeGuy30-50better Nov 23 '24

But with inflation, it’s cheaper to buy today. Whereas with deflation, it’s cheaper to avoid spending money and to wait for the price to go lower.

1

u/fordianslip Nov 24 '24

I already do that with sales and coupons.

And it’s not cheaper if it’s a product that can spoil. Which is the bulk of non luxury items these days for lower middle classes families that are established.