But deflation and inflation don't work like that. It's not a sudden drop or a sudden rise after which we magically reset. It's a process. I'm only responding t

But deflation and inflation don't work like that. It's not a sudden drop or a sudden rise after which we magically reset. It's a process. I'm only responding to bokonist's hypothetical, which is also not what the article is about (slow and steady deflation). There's lot of questions to ask about your $5.15 sample there. Were there maids out of work? There were lots of unemployed people during the recession who could have cleaned houses. I don't know why you think someone previously employed as an HR exec for $100k is incapable of cleaning houses at minimum wage. The purpose of inflation is that in your hypothetical where a company needs to reduce employee costs by 10%, the company can sneakily hold wages fixed and allow the wages to inflate away. This gets around the prideful worker reactions to having their nominal wage cut.