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

Optimal Finance Daily - Financial Independence and Money Advice

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Investing, Business, Education, Self-improvement

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🗓️ 7 August 2025

⏱️ 13 minutes

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Summary

Discover all of the podcasts in our network, search for specific episodes, get the Optimal Living Daily workbook, and learn more at: OLDPodcast.com. 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 Learn more about your ad choices. Visit megaphone.fm/adchoices

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0:57.6	This is Optimal Finance Daily. Stocks, Part 14. Deflation, the Ugly Escort of Depressions
1:04.6	by J.L. Collins of J.L. Collins.N.H.com. In part 12, Bonds, Reader Chronicrants commented, quote,
1:14.6	I'd love to see more about deflation. I've always been confused about it and about its
1:19.7	consequences. It seems like it would be a good thing, and yet, end quote. Great point, and what
1:26.4	better topic I thought for unlucky number 13 in this series.
1:30.7	Unfortunately, I forgot that was my plan. And withdrawal rates got spot number 13. It's tough getting old.
1:38.4	When deflation has come up in my previous post, it's been the ugly escort bringing depressions to the ball. Indeed, here in the
1:46.2	USA, we've had four depression since our founding in 1776, 1818 to 1821, 1837 to 1843, 1873 to 1896,
2:00.3	the duration record holder, and the one we think of 1896, the duration record holder,
	...

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