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Exactly. I have no debt and a bit of cash savings that are now worth 1% more, woo hoo! Sustained high deflation is only good for you if you have a magical sour

• jmatt 18y ago
  Like an annuity or pension... retirees come out ahead for once.
• Prrometheus 18y ago
  Wages tend to be sticky. That is, they adjust slower than many other prices. This works against workers in an inflationary environment and for them in a deflationary environment. Keynesian monetary stimulus is premised on the "sticky wage" theory, basically the idea that by printing money you can reduce workers' real wages in the short run and increase the output of firms. Of course the flip side is that if workers' real wages increase too much in a deflationary environment, this could lead to high unemployment in the short term.
  • biohacker42 18y ago
    Wages are sticky but jobs aren't. Hyperinflation kills banks, because the loans devalue so fast they are worth nothing when they are repaid. Deflation in small amounts can be good for savers, but high and sustained deflation kills all borrowers. That includes short term financing businesses need to pay salaries while sales are still being made and profits are still coming in. Overall it leads to everyone hoarding cash and not spending and that just murders the economy.
    • Prrometheus 18y ago
      Sharp deflation, like during the Great Depression, is bad as you say. Slow deflation, like the period after resumption, is not bad. In reality, the economy is quite capable of coping with any mild change in prices, and quite bad at dealing with sharp changes in price. It doesn't particularly matter whether those changes are up or down.