Common blunders for non economists

This global crisis is shedding light on economics glossary and theory, actually bringing this now under estimated subject back on the stage.
Sometimes though, certain dynamics can be erroneously misunderstood by the average person who didn't study economics at school. Here are some common pitfalls non economists might fall in, and a simple explanation of what they really mean.

Fact: there's a crisis.

Fact: prices may go down.

Average Joe: "If prices go down, all the best for my wallet. Things will be cheaper and I'll be able to purchase more goods for me and my family."

Mr Economist: "I am sorry Joe, but prices going down, it's not exactly something to be happy about"

Although rare to happen deflation is as dangerous as high inflation. When a crisis like this one we are experiencing takes place, supply doesn't meet demand and can lower the price of goods in order to sell them. Continuous price decrease though, can lead to a viscious mechanism called deflation spiral. In this case, knowing prices are going down, people may decide to postpone purchases: the consequences of this behaviour would be serious. Manufacturers of goods will be forced to lower prices always more, and to preserve their profitability they will start firing workers, ultimately leading to high unemployment and impoverishment.

Fact: inflation slowly erodes purchasing power.

Average Joe: "Inflation makes our wages worth less year by year. Employers should ensure wages grow at the same pace as inflation so that workers' purchasing power is granted"

Mr Economist: "I know what I am going to say is unpopular Joe, but this solution is not the best"

The system for which wages grew according to the inflation rate is called "threshold agreement" and it was a drivaer of union policy for many years. Although the idea of granting constant purchasing power to wages in front of increasing price levels is socially sound, it is economically speaking non pursuable. The increase of wages would just be the trigger for even higher inflation and price increase. Employers will have to pay their employees more, but at the same time they will charge more for the goods and services they provide, triggering growing inflation. This system would ultimately lead to a dangerous inflation spiral, which would make the purchase of goods a endless struggle.

Fact: government taxes wealth to provide services.

Average Joe: "I think governments who reduce taxes are better than those who take more money from you"

Mr Economist: "It is not so simple Joe, to judge a government on the basis of tax policy, as it is not simple to design a good economic policy"

Apart from political considerations, it is important governments who spend money to grant welfare services to its citizens don't end up accumulating too much public debt. A government lowering fiscal pressure should inevitably try to reduce the services it provides, otherwise it will need to borrow money through the issue of public debt. Too high public debt leads to dangerous economic consequences (see Greece) threatening its country currency stability and operations. High debt leads to lots of interest to pay, and those interests needs to be paid by finding an alternative source of money: a)other debt or b)taxes. Solution a) is not a solution because it feeds the debt spiral. Solution b) is a permanent solution but it is a very unpopular decision to be taken, especially before elections.

Nothing too technical.