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Originally posted by Frogs
Basically for some of the reasons already posts it can be considered a bad thing. Sometimes if it happens as the result of productivity gains it can be good - kinda like you figure out how to make something cheaper and can charge less.
But - if it happens as the result of people mucking about with the economy when they shouldn't - it can be bad.
Deflation: The Good, The Bad and The Ugly
Why Is Deflation Bad?
Originally posted by Malech
Because when there is deflation, the price of things starts to reduce.
If this happens for a while, people will see that prices are falling and think "why buy today, when it'll be cheaper tomorrow?", which exacerbates the problem. So prices start falling, people aren't buying, and companies start collapsing from lack of cashflow - leading to loss of jobs, even less people buying and then you start spiralling into a depression.
So deflation isn't really something you want