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this post was submitted on 24 Dec 2023
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If you already have money, deflation is good for your net financial position, sure. If you work for your money, deflation could mean your boss has to either cut your wages, or fire you. Even if that money can buy more, people are very unwilling to take a pay cut.
That means if there's a sudden (but small) drop in productivity in an industry, inflation can paper over it, and deflation amplifies it, and potentially means the industry collapses.
One additional factor is that there is only a slight delay for prices to catch up with inflation but a major delay for wages to rebound. In a roundabout way inflation allows companies to cut wages without it feeling as shitty to the workers. This is why the central banks throw on the money printer when they fear an incoming recession.
This might seem unfair to the workers but is usually the preferred solution over tons of people losing their jobs.