Low inflation might be the first step towards deflation. Many economists would argue that deflation is a worse situation for the economy because it leads to a sharp drop of consumption and therefore a huge recession follows?
A poor person needs to spend the bulk of their money to survive. They can’t spend less on food, shelter, ect. Because they are likely at the cheapest option already. If they were able to save that money they would be able to buy more tomorrow. But they can’t. So they spend money that ends up being worth more tomorrow than yesterday.
A rich person can see deflation and hold back on their spending. Most of their spending is not necessity but discretionary. They can spend less and grow their money by doing nothing with it. They don’t need that second yacht and can wait I’ll tomorrow when the price drops.
The poor are working for minimum wage. Their paycheck cannot decrease, and with deflation each paycheck goes further and further. They're also more likely to work jobs crucial to society, and can't be subject to layoffs
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u/StuartMcNight 8h ago
Low inflation might be the first step towards deflation. Many economists would argue that deflation is a worse situation for the economy because it leads to a sharp drop of consumption and therefore a huge recession follows?