It’s terribly amusing to see how writers go about explaining why lower prices are actually a terrible thing to be dreaded by one and all. Here is CNN’s latest attempt (”Deflation Worries“): “During periods of true deflation, consumers tend to hold off on purchases, especially big ones. Why buy a new car now when it will it be cheaper later on? That kind of thinking, multiplied by millions of consumers and businesses, can lead to a drastic drop-off in demand, which can lead to falling revenues and profits for companies, which can lead to layoffs, which can lead to falling wages and income, which could further depress demand and start the cycle over again.” Interesting that falling prices haven’t stopped computer or appliance sales. And what about the assumption that money not spent is somehow destroyed? For a better perspective see: The Imaginary Evils of Deflation.
