Deflation question

WJones & MGandall wj_mg at
Tue Jan 21 17:02:12 MST 2003

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The effect on the working class is mixed, depending on whether one is
earning an income or not. During the depression, workers who managed to
hang onto their jobs benefited as a rule from deflation -- even where
they (typically) had their pay and hours cut -- as price levels
generally slid farther than wage levels, resulting in a net gain in real
wages. On the other hand, the growing legion of unemployed could
attribute their plight directly to the effects of the deflationary
crisis. And all workers, whether employed or unemployed, as debtors had
a tougher time paying off loans in an appreciating currency.

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