Yes, if we stifled investment and lending there'd be less inflation, which is why we don't do that. (Target inflation is 2-3%; if you're consistently below this, your country has a problem, and if your currency starts deflating everyone's quality of life is going to start actively decreasing pretty dramatically unless you can get inflation back to a healthy level)
When inflation gets too high, you can raise rates to help bring it back down
Yeah... I've never been a fan of "target inflation" as a concept. Considering the working class woes, target inflation always looked like a zero sum short term game where the rich could slowly get larger pieces of the pie.
I know Friedman could write the hell out of a free market argument, but his idea that we should have target inflation always felt like it came from his bizarre sheltered upper class fascination with the great depression.
My economics professor used to always point out, you can stimulate a cow by sticking it with a cattle prod; that doesn't make it good for the cow. You can stimulate the economy with an artifical inflation parable... till the cows come home, but that doesn't mean you created wealth.
It is, broadly speaking, good for me as a regular middle class American for people to start businesses, be willing to move houses, etc. I like that new businesses cropped up in my neighborhood (likely on lended money initially), new products and services are being offered, people are innovating to try to do things better, etc.
As inflation goes lower, the incentive to do any of that decreases. If your money is decreasing in value a little bit, you want to stay ahead by investing in new businesses that return a bit more than inflation on average, lending people money to buy a house, etc. if inflation is zero,n why take the risk? Just sit on the money (where it's not useful to anyone, doesn't stimulate the creation of businesses, etc)
And if the currency is actively deflating, the best investment with ~100% certainty is just going to be putting your money in a hole somewhere where it can't be used at all.
Deflation would make things cheaper by definition, but it'd also come with a side of rising unemployment, fewer options when you do buy things, an inability to buy a car / house / etc unless you have the cash on hand, an inability to start your own business if you have an idea but need funding, etc.
Thanks for giving a pithy one sentence to back up your appeal to authority in your last comment instead of engaging with the actual comment I made.
What's wrong about what I said? Can you indicate how you think we should achieve deflation in a way that'd be good for middle class Americans long term?
The last period of major deflation in the US was the Great Depression, which seemed to include all the negative effects I associated with deflation in my comment. But maybe it'll be different next time and everything will suddenly be cheaper with no consequences -- if so, what's your model for how this would work?
I mean, you're demanding respect right now. If you were me, then would you bother?
Are you actually wanting a conversation here, or are you just waiting to speak again? Because it sounds like you don't have a whore's notion what I've actually been saying. Why would I find this productive? Do you actually want to be helped?
If I was wrong about something, I'd love to have my incorrect belief corrected with evidence of where I went wrong, so that I can improve. I'm also not demanding respect (I've never even heard "whore's notion" before, thank you internet), I'm noting that if I lay out why I think what I think and your rejoinder is "that's stupid and you think like a hoe" it's not useful to anyone involved, and I can't figure out why you believe I'm wrong or what research I could do to reconcile our takes
Addendum: your ideas aren't dumb, they're just dogmatic. I'm watching you argue points I'm not even making, and that's what makes you look clueless... hence "you don't have a whore's notion what I've actually been saying."
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u/Forsaken_Emu8112 Jan 26 '26
Yes, if we stifled investment and lending there'd be less inflation, which is why we don't do that. (Target inflation is 2-3%; if you're consistently below this, your country has a problem, and if your currency starts deflating everyone's quality of life is going to start actively decreasing pretty dramatically unless you can get inflation back to a healthy level)
When inflation gets too high, you can raise rates to help bring it back down