The prices going down are the only good thing about a crisis; nobody complains about falling prices in energy prices or electronics; restrain for consuming because prices have been a bit lower than last year and the fact that consumers anticipate lower prices thus delay their spending is a TOTAL myth : who would delay buying gas if the price goes down by 1% or even 5%? Who would delay buying gas if he thinks the price will be 1 or 5% less in a year?? Who would delay buying anything because the price went down?? You will wait a year to buy food, a haircut, clothes, a vacation because you think it will be a bit lower in a year??
When the prices go down you are happy and richer so you buy more
It is not a myth. It has been proven many times through history that when prices are falling (or people get an increase in wages, which is effectively the same), they tend to save more, not spend more. If it were not so, there would be no ground for a deflation spiral...
Exactly there is no ground for a deflation spirale! People spend more when prices go down; you must have never bought anything if you don't know that : are you a politician in Washington or an Economics professor??
The prices going down are the only good thing about a crisis; nobody complains about falling prices in energy prices or electronics; restrain for consuming because prices have been a bit lower than last year and the fact that consumers anticipate lower prices thus delay their spending is a TOTAL myth : who would delay buying gas if the price goes down by 1% or even 5%? Who would delay buying gas if he thinks the price will be 1 or 5% less in a year?? Who would delay buying anything because the price went down?? You will wait a year to buy food, a haircut, clothes, a vacation because you think it will be a bit lower in a year??
When the prices go down you are happy and richer so you buy more
Consumption is a an indirect utility function of the price meaning that consumers consume more not less when the price is lower thus they consume more when the price goes down, it has been proven each time a price has been going down
Most of your examples are necessities that have fairly inelastic demand. Without major lifestyle changes, you still need about the same amount of gas, food, electricity, etc. When you need to cut expenses, you generally look at optional purchases. Can a new computer wait until next year? Can I get by with this old car for another year? And all of that aside, have you never waited for a sale, or a better sale than the current sale, to buy clothing or a vacation trip? Have you never postponed filling your gas tank because prices are falling and you have a pretty good idea from experience that they will be a few cents cheaper next week (assuming you don't need to fill your gas tank every week)?
Also keep in mind that in a deflationary environment, as a whole, wages also drop along with prices (where a "drop in wages" may come in the form of job cut). If I think I'm going to be making less next year, or if I fear I will lose my job, then I'm going to save every penny I can this year. That kind of mentality leads to less spending and further slowing of the economy.
What about smartphones it is not a necessity but people buy more even when they know the price has been going down and is likely to go down
When the price goes up people can consume less
Salaries going down are a bad effect of a crisis and it is upset by the deflation of prices which is excellent
Technology in general, especially electronics, is always getting cheaper because of how fast it evolves. If you want a smartphone, then yes, you eventually have to buy one, even though you know it will cost less next year. But the question is, have you ever delayed a purchase or bought an earlier generation product because of that fact? When I look for new computer parts (I build my own), I decide on what I want to get to meet my needs/desires. Then I wait a little while either for a good sale or for prices to drop when the next generation comes out. If I were really concerned about money, I'd wait even longer. If hard economic times lead to consumers buying every other generation of a smartphone rather than every generation, that will have a significant economic impact.
As for the effects of an economic crisis, if prices and wages drop a small amount, that can be beneficial for most (with the exception of those that lose their jobs due to the crisis). But the danger with deflation is that it's very easy to get into a deflationary death spiral. People spend less which causes prices to drop and people to lose their jobs, which leads to less spending, lower prices, and more jobs loss, which leads to even less spending, lower prices, more jobs lost, etc.
Deflation can arrive when there is a crisis but it is not the deflation which is the problem, it is the only good thing
Why the government is saying that when the gas prices go up or when the truiton go up it is bad if inflation is good??
A country is rich when its currency is strong without inflation or with deflation, low taxes, low government, free entreprise, high rate of savings and investment
Actually, I'd say a country is rich when its people really care about one another and help each other out. But that's a different topic.
Setting aside governmental manipulation, a country's currency is strong when its economy is doing well (generally speaking, anyway--technically, from a value standpoint, a country's currency will increase in value relative to other currencies as long as its economy is doing better than that of other countries). As deflation and economic contraction generally go hand-in-hand, it would be hard for a country's currency to do well during deflation.
It is not hard at all : the US during the 19th!!
Switzerland has stable prices for decades
