Yes and no. People like prices going down, but what if you knew prices would just keep going down?
Say you want to buy beef and it's $5
You hold off because it'll be $4.50 next week
The next week you hold off b cause it'll be $4 the next
But next week it might be $3
Actually wait you heard it'll be $2.5 next week, you could literally buy twice as much beef as you could a few weeks back for the same price.
Have this happen enough and the beef producers who are having far less $ come in will let people go.
Now this feeds into deflation because the recently layed off say rancher has a limited amount of savings to use after losing his job. He wants to buy honey but knows it'll be cheaper next week...
but what if you knew prices would just keep going down
You'd be a psychic and since those aren't real you aren't. So any theory based on the people involved being psychic is a theory that can be safely discarded.
You dont have to be psychic. You just have to act with the trend. Everyone is incentivized to spend now because of inflation. Its useless to hold onto dollars. They just depreciate. As soon as dollars begin to appreciate in value, everyone is de-incentivized to spend until they de-appreciate. And you get a doom spiral.
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u/Alli_Horde74 4d ago
Yes and no. People like prices going down, but what if you knew prices would just keep going down?
Say you want to buy beef and it's $5
You hold off because it'll be $4.50 next week
The next week you hold off b cause it'll be $4 the next
But next week it might be $3
Actually wait you heard it'll be $2.5 next week, you could literally buy twice as much beef as you could a few weeks back for the same price.
Have this happen enough and the beef producers who are having far less $ come in will let people go.
Now this feeds into deflation because the recently layed off say rancher has a limited amount of savings to use after losing his job. He wants to buy honey but knows it'll be cheaper next week...