Nobody is going to give hungry because food will be cheaper next year. Nobody is going to go homeless because rents will be cheaper next year. Even if doing nothing is a good strategy, humans aren't going to do nothing because our time on earth is finite and we hate saving.
Even in an inflationary environment the rational thing is not to consume, but to invest in investments where the expected return beets inflation.
From the perspective of the wealth (who account for most consumption) we have effectively been in a deflationary environment as their investment returns consistently beat inflation
A deflationary environment is the opposite, where people sit on cash instead of investing because they believe that the investments will be worth less than the cash in the future. Inflationary environments are what make investments the smart choice, if we were deflationary no one would invest money.
No, inflationary environments don’t make investments a smart choice, they make them the only choice, because if you hold cash you lose your purchasing power over time. That’s a bug not a feature, but it’s been prettied up to sound like one for decades.
As the guy above you said, consumption is unwise under deflation because if you hold the cash you gain more value, but it’s ALSO unwise under inflation because while holding the cash erodes your purchasing power, you’d be better off putting that cash to work in an investment rather than holding it.
Deflation = hold cash and gain value, hold assets and lose value
Inflation = hold assets and gain value, hold cash and lose value
It’s two sides of the same coin. An economy which minimizes both sides is the ideal situation because both your cash and assets retain value and don’t incentivize or disincentivize one over the other.
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u/GenericGrad 8h ago
Deflation means not spending money creates wealth because money is worth more tomorrow.
Basically it means doing nothing is a good strategy. Doing nothing isn't the point of life or anything.