:00
when the prices of goods and services go
00:02
down
00:03
we have deflation lower prices may seem
00:06
like a blessing but deflation is
00:08
actually a curse because it generates a
00:10
vicious circle if prices go down the
00:13
profits of businesses tend to go down
00:15
with them and the economy suffers a lot
00:17
of people therefore either lose their
00:19
jobs or have to accept lower wages and
00:22
what do people do when they have less
00:24
money they consume less what happens if
00:27
people consume less there's less demand
00:29
for goods and services and once the
00:31
consequence of reduced demand you've
00:34
guessed an even bigger deflation problem
00:37
but camp those who haven't lost their
00:39
jobs or had a decrease in income spend
00:41
more to compensate while they could
00:44
that's probably not going to happen why
00:47
for the simple reason that seeing your
00:49
neighbor faced financial difficulties
00:51
makes you more pessimistic as well and
00:53
therefore even those who haven't yet
00:56
suffered income or job loss will become
00:58
more cautious and consume less there you
01:01
have it vicious circles 101