this post was submitted on 30 Dec 2024
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cross-posted from: https://lemm.ee/post/51182148

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[–] JWBananas 7 points 5 days ago (2 children)

If they still have a paycheck, sure. But historically, deflation leads to unemployment.

[–] Pacattack57 3 points 5 days ago

Yes. That is caused by corporate greed. Not deflation.

[–] hark 0 points 3 days ago (1 children)

You've got that backwards. People get laid off, can't buy things, then prices go down because demand is lower.

[–] JWBananas 2 points 3 days ago (1 children)

It's not just consumer spending that influences inflation,/deflation but also institutional spending. The consumer price index is a lagging indicator. Decreases in institutional spending precede unemployment and the eventual reduced demand for consumer goods and services. And increases in the fed rate (and/or other forces which cause the cost of borrowing money for institutions/investors to rise) generally precede that.

[–] hark 1 points 2 days ago

Institutional spending will decrease as credit markets seize up. If deflation is predictable at, say, 1-2%, then it shouldn't be a factor since credit would account for that.