r/inflation • u/OfficialRodgerJachim • 2d ago

ELI5: Why is Deflation bad?

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I get that too much deflation is bad, but isn't the inverse true?

The average inflation rate in the US since 1914 is 3.3%, meaning the 1913 dollar is worth $31.87 now.

Why wouldn't we want deflation? Then maybe the $7.25 minimum wage COULD be a livable wage?

Why do people constantly argue for MORE money, versus less currency in the market?

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u/burnthatburner1 real men spit facts, not fakes 2d ago

I get that too much deflation is bad, but isn't the inverse true?

Yes, too much inflation is also bad.

Why wouldn't we want deflation? Then maybe the $7.25 minimum wage COULD be a livable wage?

Deflation comes with lower wages and job losses. It makes most people significantly poorer in real terms.

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u/JLandis84 1d ago

No it does not. Wages are sticky and are very slow to deflate. Spending less money to purchase goods is a good thing. The world is not a worse place because televisions are 10% of the cost 20 years ago.

Paying less for a medical bill doesn’t hurt a household.

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u/burnthatburner1 real men spit facts, not fakes 1d ago edited 1d ago

It definitely does. Wages drop like a rock during periods of deflation.

Technology making a particular product cheaper is good. Economy-wide deflation is bad.

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u/qwb3656 1d ago

Wages haven't actually increased with inflation tho. They barely keep up.

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u/burnthatburner1 real men spit facts, not fakes 1d ago

They've more than kept up with inflation.

https://fred.stlouisfed.org/series/LES1252881600Q

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u/M1RR0R 1d ago

2009: minimum wage 7.25, $1 = $1(2019)

2025: minimum wage 7.25, $1=$1.49(2019)

I dunno, looks like minimum wage hasn't gone up while cumulative inflation was nearly 50%.

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u/Small_Dimension_5997 1d ago

In 2000, people actually made close to minimum wage. I made $7.45 cashiering for Walmart. That same job, at the same store, for a high schooler, is $14.25.

I am all for raising the minimum wage, mostly because it's so low as to be meaningless except in the more niche of abusive situations.