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Re:Why Falling Prices Are Actually a Really Bad Thing by icebraining on Thursday January 22, 2015 @10:16AM (#8929540)
While there are certainly fixed costs to being alive (like toilet paper), most people do cut back

But why, if things are getting cheaper?

Re:Why Falling Prices Are Actually a Really Bad Thing by Retric on Thursday January 22, 2015 @10:35AM (#8929661)
It's not cheaper right now, it will be cheaper tomorrow.

EX: http://buyersguide.macrumors.com/ note the 'don't buy' recommendations.

Re:Why Falling Prices Are Actually a Really Bad Thing by icebraining on Thursday January 22, 2015 @10:46AM (#8929737)
Yes, but Amezarak said it was "not because they want to save now to buy more TP later", which is what you're describing.
Re:Why Falling Prices Are Actually a Really Bad Thing by Retric on Thursday January 22, 2015 @01:37PM (#8930806)
The gap between getting a new phone every 18 months vs 2 years is fewer purchases over the long term. (~1 fewer phones every 8 years.)

The same thing works for durable goods not just improving goods like PC's. Consider if you wait 1 month when buying a chair it's 1 month newer so you’re likely to wait an extra month before replacing it. Multiplied by 100 million a people and even just 1 month becomes significantly lower consumption.

'This' starts a vicious cycle where fewer durable goods are produced so make fewer goods and thus have less money which reduces consumption of durable goods and non-durable goods. Using the TP example if your broke you can slightly cut back on TP use.

Re:Why Falling Prices Are Actually a Really Bad Thing by Amezarak on Thursday January 22, 2015 @10:49AM (#8929748)
Because by the time people are looking at cutting TP costs, it's because their household income is down probably substantially, or they're afraid it will be in the near future.
Re:Why Falling Prices Are Actually a Really Bad Thing by icebraining on Thursday January 22, 2015 @10:50AM (#8929758)
But why would their income be down (in real terms) in the first place?
Re:Why Falling Prices Are Actually a Really Bad Thing by Amezarak on Thursday January 22, 2015 @11:08AM (#8929855)
Because someone in the household lost their job.

Deflation makes employees more expensive even as demand slows. Even in some kind of ideal economy without downward nominal wage rigidity (which leads to people getting outright fired instead(, their wages get cut. But that can end up being almost as bad: almost everyone has mortgages, student loan debt, car notes, or credit card debt, and suddenly that debt is consuming more of their annual income, forcing them to cut back.

It's a problem with aggregate behavior and feedback loops. As long as you're zoomed in on the individual level, it doesn't make sense.

This is exactly what happened during the 2008 recession. Once triggered (in that case by the housing bubble, subprime mortgages, etc) it spreads through the economy and it's hard to break out of - we still haven't really done so. The Fed is still failing to meet the target inflation rate despite extraordinary monetary measures.