A Little Ray of Sunshine

Wednesday, July 06, 2005

And deflation is bad because???

Okay, I get the whole inflation thing. Prices go up, wages don't, we can't buy as much. Interest rates go up. At least, that's my experience. Got it, that's bad. (I know in theory that wages should go up, but they don't, at least not at our earnings leval.)
But why is deflation bad? Prices go down, okay, that sounds good. Wages go down, well, if prices went down, no big deal. Spend less earn less. I like this better than spend more earn the same. What'd I miss? Debt? Umm, isn't that taken care of by people refinancing/getting new credit cards/taking out new loans at lower interest rates? I mean, you know, people who have credit cards and houses and stuff like that.
Would someone who gets economics like to explain why this is a bad thing?


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