Comment on [deleted]
Don_alForno@feddit.org 3 weeks ago
“Inflation decreases” means “the prices are being raised slower”.
What you are looking for, prices going down, is “deflation”. Governments generally do their best to avoid that, because people would start holding off on purchases expecting lower prices next week, month, quarter,… and it would tank the economy.
Governments generally do their best to avoid that, because people would start holding off on purchases expecting lower prices next week, month, quarter,… and it would tank the economy.
That’s not how human nature works. If people need groceries, they aren’t going to hold off purchases until the prices go down.
Right, but instead of spending 1200 a month they are only spending 800.
daniskarma@lemmy.dbzer0.com 3 weeks ago
If not so much about holding purchases. Is about money sitting. With deflation your money is worth more each day. So investment is discouraged. Why risk money if money by itself grow?
In a economy based on investments that not desired
toastmeister@lemmy.ca 3 weeks ago
I think its because deflation is when the money supply is contracting, so asset values begin to be valued at their actual value instead of their inflated nominal value. Which an inflated nominal value causes more consumption via the wealth effect, and the misallocation known as the business cycle.