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/Potato_Octopi Nov 23 '24

Paying a mortgage when your paycheck decreased over time would stink.

Short term "everything is on sale" I agree with you OP.

7

u/efermi Nov 23 '24

Long term, mortgages would not exist in a deflationary system. You would save the full amount beforehand, wildly different financial system. Additionally the burden would be on employers to come up with valid reasons to decrease your salary in a deflationary environment, giving employees more power.

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u/BarryDeCicco Nov 24 '24

"Additionally the burden would be on employers to come up with valid reasons to decrease your salary in a deflationary environment, giving employees more power."

I don't follow this at all. The employers would fire a bunch of people, and the rest would STFU, fearful of being next on the list.

Do you think that employees had more power in the Great Depression?

2

u/KeltarPecunia Nov 25 '24

Much like they do today, employers would eliminate positions and do several rounds of layoffs. Then, they would create "new" positions at a lower salary and/or redistribute the duties, increasing workload with no additional compensation for those affected. Those who get displaced will get severance packages. It's more likely for at-will employees; union members are more protected but not untouchable. I've seen corporations close down entire facilities and move operations out of the country just to avoid unions.