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The argument that with deflationary currency nobody will spend is ridiculous. Everybody still needs to spend to buy whatever they need for daily life. Money w
by tastyfreeze 4y ago
The argument that with deflationary currency nobody will spend is ridiculous. Everybody still needs to spend to buy whatever they need for daily life. Money will still be spent into the economy. The difference between moderate inflation and moderate deflation is what people do with their excess money. With inflation people will buy stuff just because stuff holds its value and money doesn't. With deflation people save their excess. The higher the inflation/deflation level the more pronounced the behavior of spending/saving.
People having savings is a sign of a healthy economy. With savings there are more people that have an opportunity to invest. Investment provides real growth.
- BoardsOfCanada 4y agoThat's why no one could ever make any money selling computers or software. After all next month you'd get something better for less. /s
- KallDrexx 4y agoDeflationary being bad has nothing to do with essential spending and everything to do with discretionary spending. I (and many people I know) don't buy games that we want to play right away because we know they will be on sale in a month or so, and can wait. If I expect houses to go down in price I will not put a lot of effort into buying a house, and instead rent for now. Used car prices right now are extraordinarily high, so I will not be upgrading my car until prices start coming down. I'm not buying a new graphics card because I think prices are inflated and I believe they will come down sometime in the next yea. Etc... A significant portion of our economy is reliant on discretionary spending, and when discretionary spending drops we usually end up in recessions, as companies that rely on that spending start layoffs.
- deleted 4y ago[deleted]