That’s deflation, and is actually really bad for society and the economy overall.
Honestly, more workers need to unionise and restore wages to where they should be (pegging back to rates in the 80s - 90s), minimum wage should be closer $25/hr.
If real wages continue to rise higher than CPI for blue/white collar workers, rather than the capital class - things would be a lot better overall.
one of the really big problems with deflation in a system like the one we currently have is that there is no way to set a “negative” interest rate, at least trivially. So if something spicy happens, and you spiral down to a really aggressive negative interest rate, everything explodes instantly.
This is actually why we target a 2-3% interest rate, and in the times of financial struggle (globally) use it to create new money in order to stimulate an economy, which in turn raises inflation significantly, but beats another literal depression.
The primary difference between the great depression is that covid was significantly worse, and that modern monetary policy is incredibly resilient compared to back then.
you could theoretically have a system with deflation, but then the problem is that you have very little money moving through the market, and arguably you will move away from a currency based market, to a goods based market instead, which is quite literally a bad thing.
China recently deflated and is still having problems. It’s incredibly dangerous because it causes a negative feedback loop. Prices go down -> people wait to get a better price on something -> prices sink further -> people wait longer -> your economy starts stalling out and going into a nosedive.
Nobody wants to be the chump holding the bag if they buy an apartment for $50k and it drops to $20k in the next five months. :/
If deflation worked, everyone would be doing it, and we’d still be using half-cent coins just like the family in Little House on the Prairie did. (Which would kinda be awesome, I’d love to pay a half-cent for an orange.)
Deflation is actually bad because it would be an incentive to keep rather than spend money as its value would just increase by itself.
Money that is kept and never spent is worthless. Currency has to be used to have value, otherwise it’s just paper (or bits). The working class won’t hold on to their money, they have bills to pay, groceries to buy, etc. Only the wealthy would hold on to their money, which they’re already doing.
