“What can be foreseen about the world deflation?”
That is to say, minor deflation today can lead us to the major depression tomorrow.
Days after days, you watch TV, read newspaper, surf internet, or simply have some chat with friends, you can easily hear about the worldwide steep into recession. Jobs loss, mill closed termlessly, companies bankrupted… Thousands billion dollars from stimulus packages are imposed in many cradles of economic recession still lead the world shadow to no where. Even the optimists can not guarantee whether the recession will end. Thus, the current circumstance still promises the tough upcoming fiscal year with no way out.
It’s usual for the price increase to slow during the recession, that is to say “disinflation”. But inflation is really considered the national nuclear abolishment. And from them, significant risks raised will persist and decline the worldwide economy extremely and severely.
Many people are so pleased to see that today, the price of every product is reduced due to the steep economy, sothat it will help to impose consumers to buy goods, or spend their money on servies, so on and so far. Yet the economist can’t beam with it. They worry that price reduction can give the cascading effect that brings the economy to an end. Let’s say, why do we have to buy this product today, while tomorrow we can have it with much less price? The lack of need leads the manufactures to cut the price more. Hence, vigorous reduction brings no profit to the manufactures, or simply the investors to the company. Simply put, the economic investment will no longer appeal the investor, for the reason it can’t even help to recoup their investment.
It is really a dangling cycle with no way out!
Your cost of living will be declined for sure. With the same amount of money, you can buy more stuffs today than you did yesterday. It is a clear indication to show that “A dollar today is more precious than it is yesterday”. On the contrary, your living standard will follow the cost of living footsteps to slow down too.
Why?
Let’s imagine whether the companies suffer from the losses of the benefits, and gain unprofitable sales will dare to lay off more workers, raise salaries, or simply maintain your income? Many people will consequently be fired from their jobs, or be slumped their imcome even if they hold their positions. It could lead to put more weight on people shoulders, especially ones who bought houses and cars by instalments, or own a huge loan from others. It doesn’t count that the real size of the dept increases, just for a reason that money becomes more valuable.
Above all, we do want the “Stimulus packages” from many countries can prove its good effect, sothat the current deflation will be abolished soon, before it’s too late. We don’t expect to see another world depression in such a case like this.
Especially to me and my friends, when we have just only one year left before graduating ^_^.
Kiha
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