Deflation

Today Paul Krugman warns us  of deflation in the NYT. It seems that the problem lies in everything going down in price, and nobody buying, causing more layoffs, and making businesses try to sell, even less products, by lowering prices even more. This is a vicious circle.

I was wondering, could I, benefit from deflation? Imagine you have a great business idea, collect capital, obviously that is the hard part, and then your production costs go down and you make a killing. Of course you have to produce something that even with little money, people will  feel compelled to buy.

Just a thought.

From the LA Times' Tom Petruno we get:


Of course, if you have loads of cash and no debt, falling prices sound wonderful. But the danger, as Makin notes, is that a broad deflation could cause many people to stop spending and hoard cash, figuring that they could get whatever they wanted for less if they just waited.