The Finance industry roller coaster offers new turns and twists. A few weeks ago, the interest rate was on its way up to counteract inflation, and now it turns the other way. Suddenly everyone is talking about deflation and draws parallels to Japan, where not even zero interest can bring back the consumers shopping mood.
Deflation is not primarily about falling prices but about the mental effect the state has on us humans. Nobody wants to make a bad deal and as long as we believe that the car, computer, skis will be a little cheaper if we just wait, we will. Waiting means reduced demand leading to reduce production, which ultimately leads to unemployment. Continue reading Cheaper to take market share