If inflation is bad, and deflation is worse, then what is the best possible scenario for a country(that suffers from inflation)’s economy?
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Why is deflation worse?
Because under deflation everyone stops spending. Lets look at Hyper deflation to see why. You can by a House for $200,000 but if you wait 3 months the same house will cost $180,000 6 months $162,000, one year $131,000. Why would you buy now if waiting makes everything cost less? When everyone stops spending the economy basically just shuts down.
>what is the best possible scenario for a country(that suffers from inflation)’s economy?
Become the words leading economy and a supper power that dominates all aspects of the world. The US has “suffered” from inflation for 59 out the last 60 years.
inflation is perfectly fine in fact you want about 2% inflation to help facilitate spending. Even 5-6% inflation is not a big deal, We had that we had that for most of the 80s and 90s. We even got through 10% + inflation for most of the 70s. It seems like such a big deal now because we have had crazy low inflation for over 10 years, and like 2% for the 10 years before that. As a result people, and corporations, have sort of forgotten how to deal. Inflation only really becomes a big issue if it stays at about current levels for years on end or if you have hyper inflation, More that 50%.
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