Since deflation leads to falling prices, would that create jobs, instead of kill them? Since people are more likely to purchase cheaper goods?


3 Answers

DDX Project Profile
DDX Project answered

Do you want another Great Depression? This is how you get into a great depression.

When the value of money rises over time, people stop investing their money and their spending actually slows down. Why buy a house today when you can buy a house AND a car next year? People start holding onto their money. Therefore there will be less money circulating in the economy and less work being done. Creating a downward spiral of economic devastation.

Do realize that falling prices would also include falling wages. No spending, no borrowing. Economy = Toilet.

Maurice Korvo Profile
Maurice Korvo answered

Deflation would also mean a reduction of income. And with the amount most people owe on credit cards, loans, etc. They would be using most of their pay on interest, leaving nothing for spending.

Answer Question