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Getting rid of inflation would not benefit anyone. Perhaps you don't understand what inflation is... inflation is caused by an increase in market demand.
In book theory. Inflation is being caused by government economic policies and market demand is not following.
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An economy needs that increase in demand to grow. Eliminating inflation is holding demand at a constant, with results in an economy that does not grow. I shouldn't have to explain why a stagnant demand is bad for business.
While I disagree with the intervention here Germany is making sure housing prices go down.
Answer the question or don't respond. Don't deflect.
Which is better, inflation or deflation? Why will governments literally bend over backwards to prevent deflation?
Neither is good, which is why central banks always try to stop them when they start getting out of control. They are different animals. Deflation tends to feed unemployment and decrease demands for goods, loss of profits, bankruptcies, more unemployment, etc It can trigger a vicious cycle leading to depression.
Saving money isn't the goal of an economy. In fact, saving money is counterproductive to the economy. That is why inflation encourages savers to invest.
If we sustained a 2% deflation instead of inflation, every dollar you stash away has a 2% automatic return on investment, just for sitting in your bank account. There is no reason to borrow any money ever, because what you want to eventually buy will deflate down to the price you want it at. It sounds good in theory, but when you have 300 million people doing the same thing, the economy turns into basic necessities only plus a waiting game. Why would anyone spend money on goodies if they are always cheaper next year?
Feel free to answer any of my questions. Why do governments all choose inflation over deflation?
All don't as my link above concerning Germany shows but why the hell should you demand others answer your questions when you refuse to answer the questions directed to you?
For the same reason people chase profits every day. Someone in the market making 2% sees something they believe will make them 5% they jump.
In a deflationary environment a 5% return might be just grand. As in 2008 where there were few rewarding investments due to deflation and low demands. And that's why I put up solar on my roof that year. It was a guaranteed 10% tax free return, almost no matter what the USD or economy did.
That's because stimulus and money printing don't always cause inflation. Inflation is caused by demand. If the demand in your economy sucks, no amount of stimulus is going to correct that. Japan has been going through that for about twenty years. Demand is usually fueled by population demographics more than anything.
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Originally Posted by Finn_Jarber
Neither is good, which is why central banks always try to stop them when they start getting out of control. They are different animals. Deflation tends to feed unemployment and decrease demands for goods, loss of profits, bankruptcies, more unemployment, etc It can trigger a vicious cycle leading to depression.
No, inflation is good in modest amounts. Most governments target 2-3% as a healthy inflation rate.
Saving money isn't the goal of an economy. In fact, saving money is counterproductive to the economy. That is why inflation encourages savers to invest.
If we sustained a 2% deflation instead of inflation, every dollar you stash away has a 2% automatic return on investment, just for sitting in your bank account. There is no reason to borrow any money ever, because what you want to eventually buy will deflate down to the price you want it at.
See, this is so stupid. People want the new car today, not when their $500 deflates enough to buy a car years from now.
Back to my old example that you refuse to address. People know that next year the television they are looking at will be cheaper but do they wait? No, they want it now.
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It sounds good in theory, but when you have 300 million people doing the same thing, the economy turns into basic necessities only plus a waiting game. Why would anyone spend money on goodies if they are always cheaper next year?
In a deflationary environment a 5% return might be just grand. As in 2008 where there were few rewarding investments due to deflation and low demands. And that's why I put up solar on my roof that year. It was a guaranteed 10% tax free return, almost no matter what the USD or economy did.
Shoot. If stashing money in the bank and sitting on it always yielded 5% return why wouldn't anyone do it?
In a deflationary environment a 5% return might be just grand. As in 2008 where there were few rewarding investments due to deflation and low demands. And that's why I put up solar on my roof that year. It was a guaranteed 10% tax free return, almost no matter what the USD or economy did.
You spent your money? You didn't put it away in the hopes of getting your solar roof cheaper next year?
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