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
Actually the above is exactly look what happens The great depression was cause by deflation and many many went hungry
Yeah, the problem there was the depression, not the deflation. Look at Japan. They had how many years of deflation without a depression or falling living standards
Look at Japan. They had how many years of deflation without a depression or falling living standards
Ah, yes. The so called "Lost Decades" during which Japan went from being the undisputed #2 economy of the world, with a GDP only 2x smaller than that of the US, to now being the #4 economy with a GDP 8x smaller. With growing wealth inequality, despite a barely growing economy.
I'm under the belief that the western capitalist world could do good with a brief deflationary period if one were actually achievable (without a crash), but pointing to Japan as an example of "deflation" done right is asinine.
131
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.