When you zoom into a single grocery store item, it’s great. When you zoom out to a mortgage, you’re borrowing $400k from the bank and promising to pay them back with dollars that are more valuable than the dollars you’re spending today. Plus interest. While the value of your property drops year after year.
It’s also toxic to farmers who have to borrow to buy for the same year’s harvest. Again, the dollars they pay to pay off the loan will be worth more than the dollars they borrowed at the beginning of the year, and again, plus interest. The commodity they’re selling is also going to be worth less by the end of the year than at the beginning. Look into the Cross of Gold speech by William Jennings Bryan, it explores the same theme. Back in the day, the dollar was based on gold. As new gold was discovered, the value of the dollar would drop as more money/gold entered the system. In the absence of new gold finds, there would be deflation. Bankers loved it. Farmers did not. They preferred silver, which we were mining quite a lot of back then.
105
u/Terpcheeserosin 7h ago
Why does things costing less make people buy less?
If wages stay the same, shouldnt people just buy the dip?