How do you keep the economy running as purchase power goes down? Traditionally, I don't think you can.
Henry Ford was one of the people to point this out; in the general case, you need to pay your workers enough (and keep prices low enough) that they can afford your products; else who can? (other threads have quoted him as well )
Note that one of the reasons the great depression was so bad was people underestimated the income elasticity of demand. This especially showed up in car manufacturing, where new car sales were almost entirely replaced by the used and repair markets.
Henry Ford was one of the people to point this out; in the general case, you need to pay your workers enough (and keep prices low enough) that they can afford your products; else who can? (other threads have quoted him as well )