3239: Stocks - Part XIV: Deflation, The Ugly Escort of Depressions by JL Collins on Investing Advice

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Episode 3239:

JL Collins unpacks the dangerous dance between deflation and economic depression, exploring why falling prices, often seen as beneficial, can spiral into devastating financial collapse. With clarity and insight, he reveals how deflation affects debt, spending, and investing, offering a sober reminder of its historical consequences and why understanding it is critical for financial resilience.

Read along with the original article(s) here: https://jlcollinsnh.com/2012/12/11/stocks-part-xiv-deflation-the-ugly-escort-of-depressions-2/

Quotes to ponder:

"Deflation makes debt more expensive. In a deflationary environment, the dollars you use to pay back your debts are worth more than the dollars you borrowed."

"When people expect prices to fall, they tend to put off buying. Why buy now when it will be cheaper later?"

"Deflation leads to economic depression because it puts the brakes on spending, investing, borrowing, and lending."

Episode references:

When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany: https://www.amazon.com/When-Money-Dies-Nightmare-Hyper-Inflation/dp/1586489941

The Great Depression: A Diary: https://www.amazon.com/Great-Depression-Diary-Benjamin-Roth/dp/1586489011

This Time Is Different: Eight Centuries of Financial Folly: https://www.amazon.com/This-Time-Different-Centuries-Financial/dp/0691152640

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