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I always thought inflation was a dangerous potential side effect of a booking economy, and that deflation was much more dangerous. If the baker can't sell their

I always thought inflation was a dangerous potential side effect of a booking economy, and that deflation was much more dangerous. If the baker can't sell their bread unless they charge pennies for it, it's probably a sign that people can't buy much of anything else either. IANAE

mac01021 6y ago
> IANAE I'm not sure professional economists are either...
HPsquared 6y ago
Debt is what makes deflation hazardous to people. A non-indebted baker may have to sell his bread for pennies, but the things he then needs to buy would also cost pennies so he'd end up in a similar position. However if the baker is paid in pennies, has cost-of-living in pennies, but owes the banker £1000000 for his bakery shop, this causes problems. Same with back taxes etc. On the other side, inflation is hazardous to creditors: the lender gets back less than they originally gave out (creditors also include those holding bank deposits)
- darkerside 6y ago
  If you owe the bank $10,000 you have a problem. If you owe the bank $10,000,000 the bank has a problem. Seems like the creditors are potentially unhappy either way. Debt aside, I would maintain that if people can barely afford bread, they are likely not buying cars, washing machines, or other more expensive items. That seems like a recipe for a vicious cycle where society ends up regressing towards individualism and barter, with less economic strength.
- deleted 6y ago
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