[dougmwne]

Deflation is poison to an economy. It causes everyone to sit on unproductive cash and make no investments or purchases. With the inflation rate just about 3%, that is close to the Fed’s target rate for a healthy economy where people are pushed to spend and make investments, but savings and quality of life are not eroding.

Honestly trying to get you to reevaluate your world view to be less catastrophic. Money isn’t real anyway, it’s just a convenient fiction to enable complex trade of goods and services, which are of actual value.

Unless you are in Russia, Turkey or Argentina, then please carry on with the gloom.

[logicchains]

>Deflation is poison to an economy. It causes everyone to sit on unproductive cash and make no investments or purchases.

This is a nonsensical view with no empirical backing behind it. People need things to live, they won't just stop making any purchases because their money could be worth a few percent more in future. They may buy fewer things and save more, but this is just a shift in the ratio of savings to consumption, which in the long term leads to more growth (higher savings rates lead to more growth in the long term, as there is more capital to invest).

There's not a single incidence of an economy destroyed by deflation. The depression was due to mass wage and price controls by the government, and huge tariffs, which produced all the negative effects predicted by macroeconomic theory. There are on the other hand many many economies that have been destroyed by inflation, even in recent years (e.g. Venezuela, Zimbabwe).

>Money isn’t real anyway, it’s just a convenient fiction to enable complex trade of goods and services, which are of actual value

And the fiction that inflation is good is what allows people in power to transfer your purchasing power to their buddies in the financial syatem while making you believe it's for your own good. Because purchasing power lost to inflation doesn't just disappear in thin air, it goes to the first recipients of the newly created currency, i.e. the financial system.

[dougmwne]

You can look at Japan as an example of deflationary spiral.

People buy far, far more than they need to survive. A small decrease in consumer spending can set off a major recession.

Inflation benefits anyone carrying any kind of debt. It’s great for people with mortgages and bad for anyone with bonds.

[surge]

The whole point of increasing interest rates is to encourage the same behavior, holding onto money instead of spending it, thus making money "less" available or removing it from the market. I think doing things to cause deflation to say, curb inflation from say 8% to 5% (by causing 3% deflation in value) helps as its context dependent.

I agree deflation of value into the negatives over a long term causes its own set of issues, but after you went on a big money printing spree to deal with an economic crisis, I think something like counter deflation is possible if inflation rate is still positive.

[dougmwne]

But isn’t that what we are doing right now? We don’t want deflation, but the fed is trying to create low inflation numbers so that the economy can get over the high inflation hangover. It’s widely accepted that there’s a Goldilocks zone of low inflation 1%-3% that keeps the real economy growing.

[rurp]

Wait, what? Inflation makes money hidden under a mattress lose value faster than it otherwise would have.

Unless you're upset about more money being invested in vehicles like CDs and bonds. But that isn't bad for the economy at all. The money doesn't just sit in a giant vault, it gets routed to economically useful activities.