Eli5: Why is deflation more difficult to fix than inflation?
In: Economics
Because with inflation there is a point where people can’t afford to buy things so they have to stop buying which means that demand for things drops which means prices have to stop rising and wait for wages to catch up or have to drop so people will start buying again.
But with deflation, all you have to do to get “rich” is to not spend money because every day you don’t spend it, it’s worth more and you can buy more stuff tomorrow, but the same is true again tomorrow and the next day and the next day, so if you can hold off buying that car or iPhone for months or a year it’ll be a lot cheaper, so people do hold off which means prices fall more to try to tempt people to spend money which makes people think they should wait longer so things get even cheaper etc etc etc
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