this post was submitted on 31 Mar 2024
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United States | News & Politics

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[–] merc@sh.itjust.works -2 points 1 year ago* (last edited 1 year ago)

The deflationary spiral:

  • Falling prices discourage spending (or encourage waiting to spend)
  • Companies get less income, so they cut costs, laying people off or forcing people to accept wage cuts
  • Workers have less spending power
  • Consumer spending falls, causing businesses to cut prices just to move existing inventory
  • Repeat

Falling prices might sound nice in the abstract, but almost everybody has a job that depends on someone else's spending. If their spending drops enough, your job is in jeopardy. If you lose your job, then it doesn't really help you that prices have fallen.