[astrange]

This isn't my personal theory here, it's the standard explanation.

It basically only happened once. One reason is that preventing deflation is the Fed's job and they've been doing it. Another is that for a wage-price spiral you need both things to increase; in the 70s we had wage spirals because we had a lot more union workers with automatic cost of living increase contracts. Losing those means inflation doesn't happen as fast, and workers don't exactly expect wage decreases the same way, so it's assymetric. (Japan does have wage decreases, and has been stuck in deflation for decades.)

Basic article:

https://www.frbsf.org/economic-research/publications/economi...

[WalterBright]

So the Fed prevents deflation by causing inflation.

I.e. not oil shocks.

[astrange]

It’s “stable prices and maximum employment” ie preventing both. They mostly fail to cause inflation, which is why we undershoot the 2% target more often than not.

Compare to Argentina for a country that really fails at it.