You’re conflating an economic problem that is causing deflation with deflation itself.
There is nothing inherently more negative about deflation compared to inflation for the average person. It’s just generally not caused by anything positive under our current economic model.
Deflation of a currency discourages people from spending it, because you can make more money by just holding on to it. It makes loans more expensive to provide because someone can borrow money and it will increase in value without them doing anything, so you have to have higher interest rates to counterbalance this. This harms economies. What you want is stable prices, erring on the side of inflation if you must.
I suppose for a single person deflation doesn’t feel like much, but money is collective so the party doesn’t last.
At the loan part, you’re confusing inflation and deflation. You need higher interest rates to counterbalance inflation because money loses value. Loans during deflation make the loan giver get richer by default. But TAKING a loan during deflation is a shit deal because the value of what you’re paying back keeps increasing. Inflation, assuming that it comes with gradual raises in income (which it theoretically should, just not in the modern US), actually makes your loans cheaper to pay back over time.
You’re conflating an economic problem that is causing deflation with deflation itself.
There is nothing inherently more negative about deflation compared to inflation for the average person. It’s just generally not caused by anything positive under our current economic model.
Deflation of a currency discourages people from spending it, because you can make more money by just holding on to it. It makes loans more expensive to provide because someone can borrow money and it will increase in value without them doing anything, so you have to have higher interest rates to counterbalance this. This harms economies. What you want is stable prices, erring on the side of inflation if you must.
I suppose for a single person deflation doesn’t feel like much, but money is collective so the party doesn’t last.
At the loan part, you’re confusing inflation and deflation. You need higher interest rates to counterbalance inflation because money loses value. Loans during deflation make the loan giver get richer by default. But TAKING a loan during deflation is a shit deal because the value of what you’re paying back keeps increasing. Inflation, assuming that it comes with gradual raises in income (which it theoretically should, just not in the modern US), actually makes your loans cheaper to pay back over time.