silly people about deflation. .
first, Switzerland has a completely different economic/social agreement than the US. Really the two are opposite, as described by a very smart electrical engineering marketing director friend who moved to Switzerland for work. . And since the US is a consumer based economy, let's focus on where we live versus an economy where we don't live. .. .
With a consumer based economy, if prices are declining and one wants to buy an item, why would you buy it today when the price will be less tomorrow? Come tomorrow, the same dilemma exists, why buy today when tomorrow will be cheaper?
When that happens, commerce starts to grind to a halt, there are surpluses everywhere and few are willing to buy, while most are waiting for tomorrow's final price decrease. . which is why scarcity is a successful business strategy, and a coffee shop on every street corner is not a profitable strategy. What's good for the consumer is not good for the company, and what's good for a company is not good for the consumer. . . but since everyone derives their consumer income from a company or a job. . .
Key point to remember is:
inflation favors debt holders, paying off the debt with cheaper money.
deflation favors the cash holder, as cash becomes more valuable relative to goods and debt becomes harder to repay.
The US hasn't experienced real economic deflation since the 1930's, so for most people, the concept is totally mind boggling.
You had your chance to listen to the stories from your parents and grandparents, if you were old enough to understand them and ask about them. . .
My grandfather was an oil burner repair man. In the depression, they would scavenge burned out homes for furnace replacement parts to keep their furnace working. . . totally foreign concept eh? location: Milton, MA, a Boston suburb
source: my Masters' degree economic paper about the causes of the 1930's depression and stories from dad and mom
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