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> This is despite the greatest financial crash since the great depression. Inflation isn't necessarily a problem when you have a depression or recession (unles
by glesica 13y ago
> This is despite the greatest financial crash since the great depression.
Inflation isn't necessarily a problem when you have a depression or recession (unless inflation is the cause of the pain). During the Great Depression we experienced deflation, IIRC, as the money supply contracted (a shrinking number of dollars chasing a more-slowly shrinking number of goods). So while I'm not saying you're right or wrong, the absence of inflation during an economic crisis really isn't evidence of anything in particular.
- reqres 13y agoThe rate of inflation is how modern central banks are graded on their performance. In countries like the UK or New Zealand, it is the primary benchmark and the main metric that is targeted. The story is a bit different in the US where the Fed is mandated to watch over prices AND output + employment. Although its not the same as economic output - having stable prices is important to support growth or a recovery. Deflation prolongs a depression - this was the major motivator for quantitative easing in the last financial crash. I should correct myself - I should have said "low + positive + stable" inflation and not just "low inflation"