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.
yes, right now holding assets (stocks included) is better then holding cash. Debt is cheap. And there is zero incentive to save money or be frugel.
The wealth divide everyone is upset about exists between those with assets and those without. Everyone is leveraged up to their eyeballs and have no money. Prices of everything is not inline with actual society.
We needed deflation a decade+ ago it would have been short lived preventing these issues. I dont even know if we can survive it now, we arnt going to survive the current plan either, so go for it!
why on earth would you hold money instead of buy stocks? or a phone? or anything not a dollar? the dollar will be worth less tomorrow and the day after.
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u/OpenRole 7h ago
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