Deflation Explained in One Minute

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when the prices of goods and services go
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down
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we have deflation lower prices may seem
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like a blessing but deflation is
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actually a curse because it generates a
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vicious circle if prices go down the
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profits of businesses tend to go down
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with them and the economy suffers a lot
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of people therefore either lose their
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jobs or have to accept lower wages and
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what do people do when they have less
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money they consume less what happens if
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people consume less there's less demand
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for goods and services and once the
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consequence of reduced demand you've
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guessed an even bigger deflation problem
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but camp those who haven't lost their
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jobs or had a decrease in income spend
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more to compensate while they could
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that's probably not going to happen why
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for the simple reason that seeing your
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neighbor faced financial difficulties
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makes you more pessimistic as well and
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therefore even those who haven't yet
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suffered income or job loss will become
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more cautious and consume less there you
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have it vicious circles 101