There’s a significant difference between consumer goods and industry here though. A consumer will buy cheap stuff today, even if it’s expected to be cheaper tomorrow, because they’re buying it for their own pleasure/consumption.
A business buys stuff as an investment to make more money. If material prices are decreasing, no one in their right mind would invest a to of money into building housing today, when they can build the same thing later for less money and turn a bigger profit. The same goes for buying equipment to expand your business. The problem with deflation isn’t that people stop buying food and consumer goods, it’s that companies stop investing money into making goods and improving their business.
There’s a significant difference between consumer goods and industry here though. A consumer will buy cheap stuff today, even if it’s expected to be cheaper tomorrow, because they’re buying it for their own pleasure/consumption.
A business buys stuff as an investment to make more money. If material prices are decreasing, no one in their right mind would invest a to of money into building housing today, when they can build the same thing later for less money and turn a bigger profit. The same goes for buying equipment to expand your business. The problem with deflation isn’t that people stop buying food and consumer goods, it’s that companies stop investing money into making goods and improving their business.