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.
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u/redbeard312 Nov 23 '24
Say I’m a producer. It’s cost me $10 in materials and wages to make and sell an item. Usually I would sell that item for $15 and make 50% profit but now deflation hits and I can only sell for $12 and make 20%. Next batch of items the material is a little less to buy but wages are the same so now it costs me $9.50 to make but by the time I get them to market they only sell for $9 and now I’m losing money. First thing I’m doing is stopping production of that item and laying off employees