[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.