And if you have any student loans, car loans, home loans, credit card loans, they all stay the same (including their interest rates), while the amount of money in the system shrinks. The odds of your income shrinking increase, but your debts don't.
For a nation in which most everyone has debt, and a large chunk of the housing market is already teetering on the brink of the default, real deflation could be a huge problem. I don't envy Bernanke's devil's choice one bit.
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It also makes your pay cheaper, your job cheaper (easier to get rid of) and your mortgage more expensive (relative).
Yay!
And if you have any student loans, car loans, home loans, credit card loans, they all stay the same (including their interest rates), while the amount of money in the system shrinks. The odds of your income shrinking increase, but your debts don't.
For a nation in which most everyone has debt, and a large chunk of the housing market is already teetering on the brink of the default, real deflation could be a huge problem. I don't envy Bernanke's devil's choice one bit.