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Clarke Co, Iowa | Sure, everything starts to cost less. Price of gas falls a buck or two that would be good. Crude oil falls under $50 what's that to me I don't care. Oil from oil sands and fracking grind to a halt as it's no longer profitable. No big deal till the shortage starts. Then the guys we did not care about and went broke cannot get $ to start back up.
Better yet that new or used pickup you bought three years ago can be replaced for a 1/3 of what you paid for it. The problem is you financed that old truck for 72 months at 0% because it was a good deal, and everything was going up 20% a year. But now with deflation you owe more on your old truck than a new one costs.
Same thing happens to your house. The house you bought for $250,000 on an ARM at 1.9% is now worth $150,000 and the rate is going to 8.9%. Even better yet if it was new and had a 5-year tax abetment. The payments that were no problem now are double and because we have deflation you just got a pay cut.
Anybody that lived through the deflation of the 1980's learned what deflation was. In deflation cash becomes King. Debt becomes a double-edged sword every $ you owe becomes harder to pay back and everything you purchased with it becomes worth less.
Big plus side is when you lose money on everything you sell your tax bill goes down. | |
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Deflation not all it's cracked up to be
