Many people panic when they see prices rise and feel happy when they see prices fall. This way of judging is actually hiding the biggest trap.

Let's clarify the concept first:

Inflation means your money is losing value. Prices keep rising, and your savings are quietly shrinking. Everyone sees that money is becoming less valuable, yet they desperately spend, invest, and buy things—because if they don’t spend today, it will be even more devalued tomorrow. During such times, life is indeed tight, not because of a lack of money, but because money cannot keep up with the speed of goods.

Deflation is the exact opposite. Prices are falling, and in terms of numbers, your money becomes more valuable. But this is where the real crisis lies. What does falling prices mean? Businesses can’t sell their goods. When they can’t sell, they have to cut costs, start layoffs, and reduce wages. Consumers see prices dropping and tend to delay purchases, waiting for even lower prices. As a result, the entire economy falls into a vicious cycle. The anxiety you feel doesn’t come from prices, but from opportunities gradually disappearing.

So the problem has never been whether prices are rising or falling; the key point is here:

**Inflation is most painful for those who save money.** The cash you painstakingly save is losing real value every month.

**Deflation is most harmful to those without a safety net.** Without stable income or reserves, unemployment leaves you without a buffer.

What is the most dangerous combination? Holding cash during inflation and having no stable income during deflation.

If you haven’t fully understood the essence of inflation and deflation, you will only panic at every price change. The true strategy must be based on understanding the rules.