83% of Americans Are Belt Tightening Due to Inflation Pressures

Re:83% of Americans Are Belt Tightening Due to Inflation Pre... by machinebun on Wednesday May 26, 2021 @04:16PM (#27295525)

Deflation benefits those with savings and fixed-income and inflation benefits those with a large amount of loans - as well as making government debt easier to repay (at the expense of those with savings, treasury bonds and holders of government debt).

If you have deflation together with a large debt bubble (like we have now), many people & companies will have to default. Not saying it's good or bad, but politically that kind of pain is intolerable (the politicians who support it would get voted out)

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Re:83% of Americans Are Belt Tightening Due to Inflation Pre... by AnimalMuppet on Wednesday May 26, 2021 @05:12PM (#27296175)

Worse: The default process leads to people selling stuff for whatever they can get (either the debtor, trying to avoid default, or the lender, trying to recoup losses). That drives down prices, causing more deflation. This cycle destroys both people and businesses. Look at a crash in the 1800s to see how this plays out. It's horrible. It's very destructive.

[ Parent | on HN ]