That’s not really true though. The only way to maintain infinite inflation is with infinite growth. But we only have finite resources. We also have modern examples of countries that experience deflation and they aren’t the horror shows that the finance industry wants about. For example, Japan.
The only way to maintain infinite inflation is with infinite growth
No - monetary policy also effects inflation. See also “stagflation”.
We also have modern examples of countries that experience deflation and they aren’t the horror shows that the finance industry wants about. For example, Japan.
It doesn’t have to be a “horror show” for it to be “bad”. Japan’s “lost decades” are hardly desirable.
Deflation would mean money is worth more. Great! But then prices drop. And then salaries drop. And now the ability for somebody to pay back a 30-yr. fixed mortgage gets harder over time rather than easier as it does in an inflationary environment.
So yeah - I’d rather a pay rise to match (or hopefully exceed) inflation that makes it easier for me to repay loans.
Edit: Oh - and frankly the thing that tends to lead to “disaster” is a rapid change in any direction. The entire goal of the “2%” inflation is “price stability”. The US economy going into deflation would be catastrophic from our current trend.
You really don’t want deflation. The correct thing now is for wages to go up to match the new costs and this has been happening.
That’s not really true though. The only way to maintain infinite inflation is with infinite growth. But we only have finite resources. We also have modern examples of countries that experience deflation and they aren’t the horror shows that the finance industry wants about. For example, Japan.
No - monetary policy also effects inflation. See also “stagflation”.
It doesn’t have to be a “horror show” for it to be “bad”. Japan’s “lost decades” are hardly desirable.
Deflation would mean money is worth more. Great! But then prices drop. And then salaries drop. And now the ability for somebody to pay back a 30-yr. fixed mortgage gets harder over time rather than easier as it does in an inflationary environment.
So yeah - I’d rather a pay rise to match (or hopefully exceed) inflation that makes it easier for me to repay loans.
Edit: Oh - and frankly the thing that tends to lead to “disaster” is a rapid change in any direction. The entire goal of the “2%” inflation is “price stability”. The US economy going into deflation would be catastrophic from our current trend.