ziggy29
Moderator Emeritus
So there *is* a word for this phenomenon we discuss from time to time:
Biflation - Wikipedia, the free encyclopedia
Biflation - Wikipedia, the free encyclopedia
That about covers it. Biflation is a killer for people on moderate incomes tied to the CPI. Almost all of the stuff they buy rises in price, but their monthly income isn't growing because the price of a cruise vacation is falling. And "biflation" is how one can feel like their standard of living is falling despite being told there is no inflation.With biflation on the other hand, the economy is tempered by increasing unemployment and decreasing purchasing power. As a result, a greater amount of money is directed toward buying essential items and directed away from buying non-essential items. Debt-based assets (mega-houses, high-end automobiles and stocks) become less essential and increasingly fall into lower demand. As a result, the prices for them fall due to the decreased volume of money chasing them. The decreasing costs to purchase these non-essential assets is the price-deflationary arm of biflation.
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