2 ms·

IIRC deflation and inflation are equally as bad. If 'inflation' rates are negative, the economy grinds to a halt. Having an inflation rate of ~2% is widely cons

IIRC deflation and inflation are equally as bad. If 'inflation' rates are negative, the economy grinds to a halt. Having an inflation rate of ~2% is widely considered to be beneficially for everyone, since it's in a 'goldilocks' zone, it creates stability. Inflation of 4% sure isn't as good as 2%, but generally speaking the inflation rate in the UK appears to hover around 2-3% during "stable" periods. https://www.macrotrends.net/countries/GBR/united-kingdom/inflation-rate-cpi https://www.macrotrends.net/countries/GBR/united-kingdom/inf...

Mizoguchi 4y ago
With lack of fundamentals in economics this is very counterintuitive. Japan is a good example of the negative consequences of zero or negative inflation. https://asia.nikkei.com/Economy/After-20-years-Japan-still-stuck-in-deflationary-mindset-Kuroda2 https://asia.nikkei.com/Economy/After-20-years-Japan-still-s...
TheOtherHobbes 4y ago
Curious that there's been so little financial stability in this supposedly stabilised ideal system.
- prewett 4y ago
  Stability is a feature of industrial processes. Natural processes are all over the place. Also, there are external shocks that you can't control (e.g. oil producers raising prices in the 70s, Russia invading Ukraine, etc.). Compare pre and post 1945. The 1800s had a depression every banking cycle, now we just get recessions. Bank failures no longer take down your life savings. The king of England doesn't sometimes surreptitiously start putting copper in the gold coins to fund wars any more (e.g. inflation). GP's chart is pretty impressive, actually. Aside from the 70s oil shock, inflation is pretty constant, especially in the last couple decades.