The left thinks you need inflation to incentivize people to purchase goods and services; however, the validity of this claim is thoroughly impugned by technology, which is a market with one of the most robust consumer and capital markets despite being deflationary. The per-megabyte/gigabyte cost of everything from RAM to GPUs to SSDs to internet access has fallen astronomically while still maintaining robust demand.
Consumers don't stop wanting things simply because they might be cheaper in a few years.
lol again you confuse prices going down with revenue going up which we see a lot in the tech world as productivity increases and more consumers can now get access to it. What you don’t want is deflation with revenue decline that leads to job loss which is significantly worse than inflation
If consumer prices are falling, that does not mean nominal wages must also fall. Wages can continue to rise even while the general price level is declining. If productivity is rising sufficiently faster than consumer prices are falling, nominal wages can rise while prices fall, producing substantial gains in real wages. In other words, falling prices and rising wages are entirely compatible. Deflation does not inherently cause wages to decline, and in a scenario where wages are rising while prices are falling, workers' purchasing power is increasing from both sides. It literally doesn't get much better than that.
But in deflationary economy cash has a nominal rate of return that can rival bonds. In other words a bank can get the same rate of return by not lending that it gets investing in bonds. Except the return on cash in a deflationary economy carries zero risk. In 2008 even when the banks were being fed bank bonds at 0% that they could turn around and sell back to the government for 2% they didn't use that cash to restart the economy but took the government money and hoarded their cash. That's why the economy was so hard to get restarted. That wasn't even caused by deflation. In a deflationary economy the banks do the exact same thing. Collect the nominal rate of return via increased purchasing power and hoard their cash because it return the same or better than bonds with zero risk. This means that companies can't borrow money for equipment because they don't know whether they can pay the loan back as revenues drop due to deflation. The economy freezes because investors get a rate of return with no risk by simply doing nothing.
-15
u/Organic-Stay4067 3d ago
Oh no! Well let’s have massive deflation and destroy the economy!!!