Also debt; the real value of your debt becomes a lot worse in a deflationary environment (set in a pre-deflation value but paid back with post-deflation lower salaries), so many people would go bankrupt trying to make payments.
So then...deflation is just a correction? It's a situation where most people are being wiser with their money? So whatever businesses can't survive because people are buying less will go bankrupt, but there will still be businesses that can survive because people will always need goods and services. How off am I here? Idk much about economics
What happens is that people are afraid to invest money in new business, real estate, investments, etc. because they are better off holding onto their money, which pushes asset prices down, which incentivizes people to not buy assets. It's a downward spiral that is hard for an economy to get out of.
This is an old talking point that isn't actually true, the vast majority of people and corporations are not purely rational actors and will not wait based on macroeconomic trends of price drops and for a great many things they just actually cant (food, rent, etc). The PS5/Tech example is bad because tech products do drop in price year over year (ignoring extraordinary current ram crisis) and yet people still buy them new all the time
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u/Ordo_Liberal 7h ago
Let's say that you want to buy a PS5.
But the PS5 price is falling everyday.
Everyday you think, huh, why buy today if I can buy it tomorrow and save a few bucks.
You do that and the store goes bankrupt because no one is buying anything. Now every employee is unemployed.
This is why deflation is worse than inflation.
The same shit happens with stocks, loans, industrial goods...
That's why as much as everyone hates inflation, deflation is worse