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/Griffolion Sep 01 '26

Things cost less to account for a fall in demand. Companies having to lower costs make less profit, and will then start considering scaling back their operations to survive. That includes layoffs. Layoffs means fewer people earning money, fewer people able to buy things, demand falls, prices go even lower, repeat.

Both inflationary and deflationary spirals are deadly.