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How come we experience so much more inflation than deflation? in other words, why does our buying power decrease far more often than it increases?
(lemmy.dbzer0.com)
this post was submitted on 22 Jul 2023
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Prices are always set by the market. How many widgets are available to buy vs how many people are willing to buy them.
In that context, the only way to reduce prices is to reduce willingness to buy, and we can only do that by reducing the money people have to buy things with.
This has a cumulative knock on effect. Less stuff being bought, less workers required to produce less stuff, people earning less money, less stuff being bought. This is called a recession, when the entire economy is shrinking.
Money is really just the lube that keeps the whole thing ticking. The important thing is that everyone is working and producing value. If everyone just stops working then we cant swap the things we produce for the things we want.