Deflation is far worse than inflation.
One of the best ways to keep deflation in check is to keep house prices rising gently because of the continuing knock on and positive effect this has throughout the economy.
Those who dream of a housing “bust” should be careful for what they wish for.
It may well be their jobs and homes that go first.
Deflation rapidly turns an economy into suffering the “Zombie Effect” where ambition, hope, progress and profit are no longer goals to aim for.
We would all become a nation of hand to mouth serfs, surrounded with a myriad of worthless gadgets and moribund assets slowly slipping back to the dank and musty dreariness of the dark ages.
Bernard Hickey argues lower consumer prices are not always a good thing and warns of the structurally heavy forces of deflation gathering around the world
December 8, 2013 :
By Bernard Hickey
Who could possibly be against falling prices?
On the face of it most people love cheaper stuff.
Over the last couple of years consumers in New Zealand have relished walking into the electronics store or the phone shop or onto the new car yard to find prices have fallen and often sharply.
Statistics NZ figures for import prices show total consumer goods import prices fell 8% in the last three years.