GaiaHunter
Diamond Member
- Jul 13, 2008
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Deflation is an issue in a consumer driven economy. During times of deflation it is advantageous to hold onto money instead of spending it as it gains value. This further drives down economic output and drives up deflation. Hence the deflation spiral. If I got this wrong I am sure somebody will be by to correct me.
Deflation caused by shrinking purchasing power is bad.
Deflation caused by increase of available products is good.
That is why despite everyone knowing that in 1 year that iphone is going to be half price and replaced by a better version you see queues to buy at release.
People buy products when they decide the price they are paying is worth it.
Will you buy a 4K monitor at $10K?
I wont, some people will.
But advances and mass production will mean some will buy it at $1000 and some will buy it at $500.
It is also a silly notion that a bankrupt costumer base is better than a costumer base with savings.
Sure, customers not buying is bad for companies already out that have trouble reducing the cost of their products/services.
But customers with money are a prime target for new products/services.
Also, if you have money you won't stop buying food, energy or pay your rent just because tomorrow they will be cheaper.