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Disappointment in the permanent increases in prices. All else equal, people want deflation after a period of elevated inflation levels.
by 88913527 3y ago
Disappointment in the permanent increases in prices. All else equal, people want deflation after a period of elevated inflation levels.
- matwood 3y agoThe Fed will fight across the board deflation like crazy because that's how the economy ends up in a depression.
- 88913527 3y agoWe did have high inflation for a year, and were told it was temporary, before tools were deployed. Would a sustained period of deflation be met with a similarly lagged response?
- eropple 3y agoMy understanding (I am not an expert) is that tools for dealing with deflation are much less effectively deployable and have ripple effects that can significantly damage the real economy.
- jhickok 3y agoThis is definitely part of it. People need to adjust to a new price reality, and while they think they want deflation they certainly do not want what a deflationary period entails is happening in the economy.