Eli5: why can’t we just “deflate” money, and why is it bad?
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I’m going to ELI5 more than most of the previous answers.
We CAN do it, but deflation is bad because it makes people not spend money.
Why? Well with inflation, prices of everything goes up over time right? Well with deflation that means all prices go DOWN over time. Sound good, but not really. When a TV costs $1000 now or $850 next year, people think “better hold off and buy it later when it’s more affordable”.
Everyone waiting more and buying less crashes the economy because everyone has a job providing things people buy. Companies go bankrupt when people buy less.
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