If inflation is bad, and deflation is worse, then what is the best possible scenario for a country(that suffers from inflation)’s economy?
In: 8
Mild and gradual inflation is what we want.
Rapid inflation is bad because it makes everyone get very poor quickly because they have to slend more than they make just to live.
Deflation is bad because is brings the economy to a halt, credit dries up, and everyone is unable to service their debt. Bankruptcies pile up, and everything goes to shit.
Gradual inflation that keeps in line with GDP and wage growth is the sweet spot to keep credit creation and economic activity running smoothly.
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