deflation is bad — we want food prices to stabilize, but not come back down

[Multicolored Lemur]

What Is Deflation? Why Is It Bad For The Economy?

When prices go down, it’s generally considered a good thing—at least when it comes to your favorite shopping destinations. When prices go down across the entire economy, however, it’s called deflation, and that’s a whole other ballgame. Deflation is bad news for the economy and your money. Def

www.forbes.com

July 2024 —

“ . . When prices go down across the entire economy, however, it’s called deflation, and that’s a whole other ballgame. Deflation is bad news for the economy and your money. . ”

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And “across the entire economy” may be the key difference. If food prices are high due to supply chain issues, then they might be able to one down some of the way.

But we don’t want to risk the brakes on for the whole economy and risk recession.

Instead, we just want the prices to stabilize at the new higher level. And for this to become the new normal. And for wages to continue to catch up as they have been doing.

 

[AgnosticBoy]

Some might view deflation as a bargain since prices are lower, but it has its negative effects on the producers and employment eventually down the line...

From the article in the OP https://www.forbes.com/advisor/in/investing/what-is-deflation/:

While deflation may seem like a good thing, it can signal an impending recession and hard economic times. When people feel prices are headed down, they delay purchases in the hopes that they can buy things for less at a later date. But lower spending leads to less income for producers, which can lead to unemployment and higher interest rates.

This negative feedback loop generates higher unemployment, even lower prices and even less spending. In short, deflation leads to more deflation. Throughout most of the U.S. history, periods of deflation usually go hand in hand with severe economic downturns.

 

[Multicolored Lemur]

And yeah, I think we want to avoid negative feedback loops.

 

[AgnosticBoy]

And yeah, I think we want to avoid negative feedback loops.

Even if I were an average consumer, I would question why are prices so low, the same way I would question someone saying that something is free. Given the way the economy works, someone will always end up paying for it down the line whether it be through job cuts, companies investing less, etc.

 

[AgnosticBoy]

I'm not real big into economics, although I know it's a very important topic. But I do like to learn about supply and demand as well as inflation and deflation. Oh, and some stock market stuff since I've dabbled in stocks.

 

[Multicolored Lemur]

But I do like to learn about supply and demand as well as inflation and deflation. Oh, and some stock market stuff since I've dabbled in stocks.

I compliment you on investing for your future. And on acquiring the job skills so you’re able to do so!

My advice is to keep it simple and straight forward, such as a low-fee mutual fund broadly diversified in the stock market, as offered by a name company such as Fidelity or Schwab.

• other name companies might be Putnam and Edward Jones. I just don’t know someone as well who’s invested in these.

 

[Multicolored Lemur]

https://www.axios.com/2024/03/12/egg-prices-2024-easter-cpi-inflation

March 2024 —

Some is due to specific reasons such as supply chain issues. This article also talks about bird flu.

But some of the price hike in eggs is due to general inflation.