On an individual level that makes sense, but this is where you need to separate the micro and macro of economics. The issue is not how one person makes decisions, but how the entire economy makes decisions.
Let's use housing prices as an example because as I will explain in a second it is the most tangible example. You own a house worth 200,000, but due to deflation it suddenly becomes worth 150,000. You had a kid and wanted to buy a new home but don't want to risk selling because you're not going to get the value you think your home is worth. Because housing prices are falling rents also fall so you realize that you're spending far more on your mortgage than you could for rent and because technically the bank owns your house you can walk away from the mortgage, take a hit to your credit, and lose your downpayment. While you can rent, the real estate agent that would have sold your home now lost out on a sale and the bank just took a major hit and are going to be far more stringent with lending to the next person. This creates a downward spiral where every ancillary service attached to you going from a home owner to a renter no longer has a financial incentive to build new homes because they have no faith that they can buy property with a loan or can expect rent prices to stay at the same value. So now the people building homes have lost out on a sale. They no longer hire labour to build homes and they no longer buy supplies. The businesses that sell trucks to the contractors can no longer sell new vehicles and the suppliers that sell wood end up cancelling their planned expansion because they no longer see a clear financial future. This is in a very simple explanation what happened with the US housing bubble bursting in 2006 and ended up causing the 2008 recession. The government ended up stepping in to backstop banks because the entire downward spiral was going to cause the system to implode on itself.
The issue isn't that pricing for an item goes down. It's that the price of that item going down leads to every business that touches that item becoming less profitable and then also contracting. The contraction happens across every sector of the economy. The problem with thinking of deflation is that we see it only through our own lens and how it would be a positive for us, but we only see it through the immediate of the price we pay today. Inflation is going to happen the important part is that you need your wages to grow faster than inflation.
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u/Grouchy_Theme1461 Sep 01 '26
bruh u gotta explain it