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Why is deflation bad? Well, to put it as simply as possible — when prices fall (deflation) it’s good for you in the short term, because you can buy a big screen tv for cheaper. But when your boss decides that since he can’t sell his widgets for more than it costs to make them (in 6 months when it is time to sell the widgets, prices will have fallen and consumers might still be delaying purchases to see how much cheaper widgets will get) he decides not to invest in new widgets.
You make widgets. You do not have a job, so you watch your big screen tv and cry until the bank takes your house.
Again, it’s a simple explanation of a complicated problem, but we’re doing our best.
consumerist makes me so happy.
recession motto!