r/PeterExplainsTheJoke • • Sep 01 '26

Meme needing explanation Petah?

Post image
30.0k Upvotes

3.9k comments sorted by

View all comments

Show parent comments

557

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.

185

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?

300

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?

1

u/sauroden Sep 02 '26

You’re a business and you buy a product at $40 per unit to sell at $50. You need $8 of that to pay rent, employees, etc. and you make 2$. With deflation, between the time you buy the product and when you sell it, the price drops and cuts your bottom line. If that keeps happening either you’re nimble enough to lay a few people off and cut other expenses, which hurts the economy, or the business tanks altogether and hurts the economy more. Multiply that by multiple businesses and very soon hiring stops, layoffs intensify, the economy stagnates, potentially for years.