Is there any reason there is all this good ole AI out here (or just Google) but people still don't know how to use it?
"
Yes, deflation can be harmful to lower and middle-class citizens, even though it might seem like falling prices would be a benefit. Here's why:
1. Wage stagnation or reduction: During deflation, businesses often see declining revenues because consumers spend less, expecting prices to fall further. To cut costs, employers might freeze or cut wages. For lower and middle-class citizens, whose incomes are already limited, stagnant or reduced wages make it harder to pay off existing debts or maintain their standard of living, even if prices are lower.
2. Increased real debt burden: Deflation increases the real value of debt. For those with loans or mortgages, the amount they owe remains the same, but their income might be reduced or stagnant. This makes it harder for lower and middle-class households to pay off debts, effectively increasing their debt burden.
3. Job losses: If deflation continues, companies may be forced to cut jobs as their profits shrink. This can lead to higher unemployment rates, particularly impacting those in lower and middle-income brackets who may not have as much financial cushion to fall back on.
4. Weak economic growth: Deflation is often a sign of weak demand, which can hurt economic growth. In a sluggish economy, job opportunities, wage growth, and public services may all be negatively affected, disproportionately harming lower-income households.
While certain goods and services may become cheaper, the negative impacts of wage pressures, increased debt burdens, and economic instability can outweigh the short-term benefits for the lower and middle class."
