Eventually, as firms go out of business. The trend arises from the difference between "break even" and "shut down" prices, and consequent delays in the feedback: it takes some years for producer firms to be removed from the market.
If prices fall for long enough, the idea of falling prices becomes entrenched in households' planning, making everything worse still.
I personally waited 6 years before I upgraded to a Ryzen CPU.
>Who is going to keep producing if you can’t make a profit?
Those who have to repay their debts.
What the Fed is doing right now isn't fighting deflation though, it's fighting something with the symptoms of deflation. A savings glut is very similar to deflation.
Deflation means your money is gaining purchasing power and therefore people start saving money instead of spending.
Retirement forces you to save money, no matter what, instead of spending it. Low yields/interest rates actually create pressure to save even more, which chokes the economy. If you don't spend money and keep investing then you will reach a point where you did every investment possible, because the lack of spending also eliminates further investments to be made. The excess capital is poured into existing investments like stocks and housing which causes a bubble to form. If there is a lack of due diligence (think of 2008 or over leveraged borrowers in general) and someone discovers that, then the bubble will pop.
The dumb part is that there are a lot of investments to be done in real estate but nobody is building to satisfy investor demand.
Deflation: if there is less demand for a product, then the price will fall. Expecting prices to fall, people hold off buying anything as long as possible.
Investment risk: With population rising at 1% per year, it doubles in 70 years. This inevitable increase in demand for products reduces the risk of investment: if a town has 1 shoe shop now, it will need 2 shoe shops in 70 years. This underlying increase in demand reduces the risk of investment in new productive assets, and also makes debt repayment easier (future income will be greater than today's).
Following the same logic, with falling population financiers will demand higher interest rates on new investment to compensate for the increased risk, and debt will have to be repaid from shrinking income.
Contrary to the article, falling investment, rather than lack of ideas, will be the major mechanism by which productivity growth stalls with falling population.
There will still be lots of ideas, but they will each have to jump a much higher investment hurdle to be realised. So we'll limp along with minimally maintained, decrepit old capital equipment and systems.