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berzemus t1_jefqdja wrote

Reply to comment by LyingCaterpillar in Eurozone inflation falls sharply as energy prices drop by misana123

Dropping prices would be a deflation.. that would be ugly

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lobbarr t1_jegbpxo wrote

Why? Everyone says is bad but I never saw an example where it's really bad.

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SapCPark t1_jegxpvb wrote

Deflation means its more expensive to borrow money so credit tightens, loans are more expensive, and jobs are lost. The 2008 recession saw this

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Haptoh t1_jegl6h5 wrote

Ever heard of the Great Depression?

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Liraal t1_jeh1ffq wrote

Generally our economy is tuned to expect money remaining in circulation (i.e. being re-invested). Under deflation, said money stays under your bed instead since it appreciates faster than it would if you were to invest, new companies are not created, old ones cannot get loans or funding and everything generally grinds to a halt. An economy structured around stable performance probably wouldn't struggle that much with this, but that is not the economy we have.

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