Quote:
Originally Posted by Chrysalis
deflation is good for the poor who often dont get increases in income.
I personally certainly prefer deflation to inflation.
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Why am I not surprised ...
Deflation is not good for anyone. When people think the price of a new car, TV or computer will be lower in six months because of deflation, then they are more likely not to buy one because they want to wait for the lower price. Multiply that across a whole economy and you get the mother of all recessions, risk an all-out depression, and watch businesses lay off staff to cut their costs. That works wonders for the poor.
Like it or not, our economic system requires an element of inflation in order to function correctly. There is no reason why this should be bad for people who are on benefits or pensions because, under normal economic conditions, a government should be able to uprate payments annually in order to preserve the real-terms value of the benefit.
Don't think for one second that they would not cut payments in cash terms, if we became mired in long-term deflation, using the argument that the measure was real-terms neutral.