1. Deflation makes money worth more and all the rest worth less.That
includes labor, which is the commodity that most Americans rely on in the
marketplace. Deflation is thus a wealth transfer from those that don’t have
money to those that do. About 50% of Americans own zero net assets.It is fair to
say that only a very small percentage of Americans will profit from this wealth
transfer.
2. Deflation makes debts and the interest payed over them worth
more.It is very
bad for Government, which owes $15 trillion.
3. Prices decline because demand is crashing. Demand is crashing because the money supply is contracting
and that is a very serious problem indeed. Deflation hinders economic growth. Inflation has the
opposite effect: people dump cash and this supports economic growth. That’s why
contractions are usually deflationary, while booms are usually
inflationary.
me - @ this time of high debt levels and income/wealth inequality concern......... Deflation is not afforable.
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