It means price can't go up anymore because ppl can't afford, businesses need to slack ppl off to stay afloat, which make ppl poorer and even less capable of buying stuff.
It's just not happening "to" the investing class. Deflation is when they, the investors, are harmed. Which is why it's an actual problem, as opposed to ever rising prices with stagnant wages which just kills the poor and homeless so that's ok.
Deflation is actually good for the wealthy because they can afford to keep their money under the mattress.
Why take any risks with investing in businesses when you can just do nothing and watch your money increase in value over time? The reason people are incentivized to take risks and invest is because their money would otherwise lose purchasing power.
Workers, on the other hand, NEED to spend on basic needs. However, because spending/investing slows down, there’s lower demand for goods to be produced, and businesses need to lay people off.
Good luck paying for your basic needs when you don’t have a job. This turns into a feedback loop where people are spending even less on just the bare minimum and even more jobs are lost.
And I haven’t even mentioned debt yet. Yeah, that gets worse over time too, because the $100 that you owe someone is now worth more in value.
Governments issue bonds to fund infrastructure and cover deficits. Not only is government debt now a much bigger problem, but with less people working, there’s less revenue that can be collected with taxes.
And that’s how everything comes crashing down. Someone pointed out that people not believing in the dangers of deflation are like the flat-earthers of economics, and that’s a good way to put it.
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u/SuspiciousSnotling 8h ago
Deflation is worse than inflation.
It means price can't go up anymore because ppl can't afford, businesses need to slack ppl off to stay afloat, which make ppl poorer and even less capable of buying stuff.
It's a death spiral