Ignore me if I’m missing the point: It’s not so much the drop in prices as the growing belief that the prices will continue to drop. People withhold money expecting a better deal and stop spending. The lack of consumer spending is the drop in fuel.
Considering that the majority of people are living paycheck to paycheck, do we REALLY think enough people are going to hold on to their money that it would cause issues?
I still need to buy groceries. If they're cheaper next week, awesome, but I still have to feed the family. I still have to pay for my bills. It feels like this would only affect people with disposable income which may affect luxury items which are already overpriced because of companies trying to achieve infinite growth.
I'm shocked we haven't already entered into a recession with the skyrocketing prices tbh. What would essentially be a deflation to self-correcting the insanity of the past 6+ years would be welcome in my book.
Hell, I might actually have MORE disposable income in a deflation event.
Considering that the majority of people are living paycheck to paycheck, do we REALLY think enough people are going to hold on to their money that it would cause issues?
Yes,
Something like 40% of the stock market is held by retirement accounts. In a deflationary economy contributing to a retirement account doesn't make sense since you can just buy the stock later at a cheaper price. So you'd see tens of trillions of dollars be pulled out of American companies because holding cash is more appealing than investing in the economy. So you'll see businesses shut down.
And then the problem becomes, you still need to buy groceries, but there's no store to buy them at because you now gain wealth faster by holding onto pictures of dead presidents, then you do by selling produce.
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u/Aldrik90 8h ago
How is a drop in prices equivalent to a lack of fuel?