Falling prices are not a good thing..

Falling prices are not a good thing... here's why. 1. When shoppers see persistent price declines, they hold out on buying things. As a result, consumer spending flails. 2. Businesses behave pretty much the same way. They postpone buying raw materials, hoping to get a break on costs, and delay investing in that splashy new facility or hiring an extra hand. 3. Additionally, their pricing power -- the ability to charge more -- vanishes. That makes it harder for them to grow profits. 4. Lower profits = less money to go around to workers. 5. The sad thing is, even when prices are falling, the amount you owe doesn't. Borrowers get crushed under the weight of that debt. 6. Policy makers usually have an antidote to economic slowdowns, but it's trickier when interest rates are already near zero. That's exactly the situation with the ECB and much of the industrialized world. That forces officials to turn to unconventional tools. Full article: (VIEW LINK)


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