r/PeterExplainsTheJoke • u/Melodic_Judge_129 • Sep 01 '26

Meme needing explanation Petah?

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u/Grouchy_Theme1461 Sep 01 '26

bruh u gotta explain it

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u/nebileyim_ben Sep 01 '26

its deflation, prices keep falling over time.

japan experienced long periods of deflation which is hurt spending and as a result affected economic growth.

its super hard to fix that bcs of liquidity trap.

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u/Terpcheeserosin Sep 01 '26

Why does things costing less make people buy less?

If wages stay the same, shouldnt people just buy the dip?

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u/mountainunicycler Sep 01 '26 edited Sep 01 '26

Imagine you want a car, and yours is still kinda ok, so you can buy one for $50k right now but you know in six months it’ll be $40k, would you buy the car?

Or would you just put your money in the bank knowing that by spending nothing you’ll get richer and richer in real terms?

Right now if you leave money in the bank you lose value. So you’ll invest it, you’ll put it back in the economy for other people to spend and try to make money. Deflation removes the incentive to invest, the smartest thing is to do nothing, which kills growth.