Complete layman’s take on deflation, but wouldn’t trading basically stop with deflation?
Say I buy a product for 4$ and the next day due to deflation I can only sell it for 3$, why would I then go and try to trade said product?
It would be bad to have anything on shelf for a prolonged period. Food would probably not be affected due to its short shelf-time, but hardware stores, electronics, basically anything else would have the risk of significant losses. These stores would simply close, no?
That also extends to global trade - big cargo ships are sailing for weeks before they can distribute their goods. The whole time the products would loose value.
Probably I’m wrong, but if that’s true, deflation would really make the shit hit the fan.
Say I buy a product for 4$ and the next day due to deflation I can only sell it for 3$, why would I then go and try to trade said product?
That $3 is worth as much as that $4 was now because deflation made the value of the dollar go up. So the only change is that “number go up” didn’t happen on a purely psychological level. If your trade provides value then you can trade for more value.
Complete layman’s take on deflation, but wouldn’t trading basically stop with deflation?
Say I buy a product for 4$ and the next day due to deflation I can only sell it for 3$, why would I then go and try to trade said product?
It would be bad to have anything on shelf for a prolonged period. Food would probably not be affected due to its short shelf-time, but hardware stores, electronics, basically anything else would have the risk of significant losses. These stores would simply close, no?
That also extends to global trade - big cargo ships are sailing for weeks before they can distribute their goods. The whole time the products would loose value.
Probably I’m wrong, but if that’s true, deflation would really make the shit hit the fan.
That $3 is worth as much as that $4 was now because deflation made the value of the dollar go up. So the only change is that “number go up” didn’t happen on a purely psychological level. If your trade provides value then you can trade for more value.