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There are real problems with deflation. It discourages both spending (people wait to buy until prices are lower) and investment (profit margins are lower, and
by haberman 16y ago
There are real problems with deflation. It discourages both spending (people wait to buy until prices are lower) and investment (profit margins are lower, and just sitting on money increases its value without the risk).
Put another way, modest inflation is the kick in the pants that we need to get off our asses and ante up into the economy. Deflation encourages everyone to sit tight and hold onto what they have.
- barmstrong 16y agoIs it possible that spending less and saving more is, at times, exactly what people should be doing more of?
- chopsueyar 16y agoNo, you fool! We need more investment in mortgage-backed securites and credit swaps. Also, if we can get a bunch of startups to IPO without any real revenue, that would also be a huge help. Remember, we are consumers, not citizens.