Why is an economic depression bad for consumers even though prices are cheaper?
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Lets consider the “Goldilocks scenario”. The economy is booming, but not so much that its getting out of control. We have modest inflation. This means that there is a small but significant over time pressure on those with savings to invest it. The need to put one’s savings somewhere, in order to not lose out to inflation actually creates a demand for opportunities, it drives the creation of new companies with new jobs. This creates demand for labor, raising wages and creating individual opportunity for everyone.
Prices going down and shrinking opportunity, go hand in hand. Do you know why you don’t hear about as many strikes in a recession as you do in a boom? Its because when there is no money to share, there is no leverage in demanding more. Workers strike when they have leverage to make demands, and that is when the company is making money, when the economy is going up… when inflation is putting pressure on everyone to take risks.
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