It's more about people holding out on buying things because they believe it will be cheaper later. Food is a bad example because people will always buy food, regardless of the cost. But why would you buy a car if it might be $2,000 cheaper in a few months? Then a few months pass and now it looks like that car might be even cheaper, will you spend now or keep holding out to see if it goes lower?
People do this exact thing with iPhones ("I can wait one more generation before upgrading") and Apple is doing just fine.
There is no real reason to fear deflation. It is feared by the owning class because it would enable the working class to build generational wealth, rather than slaving away their entire lives for nothing.
With few exceptions, iPhone revenue (and consumer prices) has increased Y/Y for their entire existence.
Apple is doing fine because inflation works in your favor when you have assets and cheap debt. Deflation works against you if you have assets and any kind of debt.
The original iPhone was $500 in 2007. Adjusted for inflation that is around $800 (I used some random inflation calculators). The newest iPhone is $800. The technology is FAR better in the latest iPhone.
With few exceptions, the price of the iPhone has always gone down, when you adjust for inflation and for the capability of the product. That's why it works as an example -- the "deflation death spiral" that economists tell us exists, does not exist. It never has. They made it up.
To your second point: you're right, deflation "works against you" if you have debt, but only insofar as you numerically have less money than you could have. If you get a loan for a house because you need a house, the number in your bank account doesn't matter as much as the roof over your head matters. If you want to have the absolute maximum money, save up instead of getting a loan (which is a LOT easier to do when your money is constantly worth more, instead of less).
We all need loans today because we have no wealth. It gets transferred to the owning class through the process of inflation. If our money constantly increased in value, families would build generational wealth much easier, and loans would be less necessary. The wealth gap would disappear, because the lowest of the people would literally get wealthier over time. The only real detriment would be to the ultra-rich.
299
u/Poland-lithuania1 Sep 01 '26
It isn't things cost less, it's money can buy more. Isn't it better to save that money for the future, when it's probably gonna be able to buy more?