So you keep buying what you need, but skip getting what you want because the prices will go down next week, and business feel the crunch because the money isn't coming. How long can you go in your old shoes or with the old iphone vs how long can businesses burn money paying salaries, but w/o income?
You're downvoted but I can see where you're coming from. Your perspective is of someone that finally sees their paycheck doing something instead of buying basics plus maybe something nice every once in a while. However, the American economy is currently held together by investments and tech moonshots. If we entered deflation, the only thing holding our paper-thin economy goes bust and everything comes down, which would have severe ramifications to everyone's income.
Basically, we can't let investments die or it all dies.
If it's only being held together by hopes and prayers is it even being held together at all for the significant portion of the country that isn't investing?
Sounds more like the status quo, which conveniently favors those currently with power and wealth, while the vast majority suffer further and further.
I'm of the mind that we're headed to an economic crash anyway unless there were a lot of big policy changes really fast. The policies in place now are letting anyone who does not have financial power right now barely stay afloat while the 'big players' continue to create imaginary gains.
We're already in a position where people are being bled dry - just slowly enough to not start rioting over night.
It's going to inevitably happen due to decades of fluffing VC cushions while squeezing everyone else just enough.
For me, there is reduction in prices because we can do better. Like Apple can make better iPhone tomorrow than today, so prices are going down. Or you needed X people to harvest some crops years ago and nowadays, one combine harvester does it all. So things are getting cheaper or better (or both).
Yes, when someone is oil lamp builder and no one is buying from him, so he must reduce prices, then it's damaging to him. And also to his employees. But increasing the costs or printing money won't save his business. Sometimes, it's better to let some businesses die.
Lowering prices makes profits less which makes investments worth less, so people with the capacity to invest do it less which creates a circular effect.
The downstream of that is that less business are started or go under, which leads to less spending overall, which exacerbates the previous problem.
If enough people lose their jobs, money only gets funneled to basic needs or nothing at all.
Could it eventually stabilize again? Sure. The gambit of it stabilizing before people are mass rioting, looting and dying is something that the people who virtually make the economy stay afloat is not a risk they want to take. So we continue to trudge that direction instead of sprinting.
The longer the economy doesn't crash, the more capital the owning class gets to leech before jumping ship.
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u/Cultural-Capital-942 7h ago
For how long can you not eat, be homeless or use Nokia 3310 before you stop waiting for lower prices?
Vast majority of my actual spending is not an investment but something I want or need.