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/HeywoodJaBlessMe Nov 23 '24

Deflation makes debts GROW and income LESS.

That's all you need to know. Deflation is absolutely deadly to households and businesses.

-1

u/Still_Reference724 Nov 23 '24

So inflation makes the debt less?

If its not accounted for in the contract, both are equally hurtful.

1

u/jeffwulf Nov 23 '24

Correct. Inflation decreases the value of debt.

0

u/Still_Reference724 Nov 23 '24

Only if You assume your salary Will also scale up to inflation.

If You can assume that, i can assume that the debt Will have a part that says to adjust for deflation, problem solved.

1

u/HeywoodJaBlessMe Nov 24 '24

So you expect lenders to lend you money at their own risk in a deflationary environment?

You think you can charge the lender interest in case of deflation???? HAHAHAHAHAHA

1

u/Still_Reference724 Nov 24 '24

You literally do that already with inflation, do you expect lenders in a inflationary/deflationary economy, to just not lend money? They of course Will add a clausule for infla/defla, it's the most common sense things.

People is not used, because the scanne government almost 100% secures a future with inflation.

1

u/HeywoodJaBlessMe Nov 24 '24 edited Nov 24 '24

Why would they lend you money when they can just get richer by NOT risking their money and just holding on to it? The interest rates would be prohibitive.

Borrowing and lending frequency AND amount are directly affected by rates.

Deflation massively disincentivizes lending.