How could deflation be bad for workers

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Assignment:

In the 1800s, we used to have periods of deflationary spirals. We know that inflation can be bad for workers, but how could deflation be bad for workers? For instance, assume the price of everyday goods decreases by 10% and your pay decreases by 10%. How could this be bad for you? Well, did your car loan decrease by 10% or your rent or mortgage or student loan or any other financial obligation you might have?

We are now nearly at the zero lower bound, is it possibly that we could enter a deflationary spiral and how bad could this be for the common worker?

Reference no: EM133952754

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