👨‍🎓 Deflation - when prices go down

**11/52** Macro Mornings Education

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Dear all,

In our journey through inflation and its extremes, we’ve touched on how rising prices can impact your finances.

Now, let’s talk about the flip side - deflation - and why, contrary to what you might think, falling prices can also pose significant challenges.

Deflation is the decrease in the general price level of goods and services. While it might sound appealing at first - who doesn’t like lower prices? - deflation can lead to a vicious cycle that harms the economy.

Here’s how it works:

Consumer Spending Declines

When people expect prices to keep falling, they may delay purchases, hoping to get a better deal in the future.

This decrease in spending can reduce demand for goods and services, leading to lower economic activity.

Business Profits Shrink

With le…