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
Generally speaking, the minimum inflation possible that has the most people working.
When our economy had the longest run growth, including wages, from 1933-1965, it was often around 4%. Right now we have a constraint so it’s about 9% and possibly rising still.
Our wealth comes from, roughly speaking, *stuff*. People make, farm, fix, ship, serve, etc stuff. That stuff is real. That stuff is what is used to make better stuff. The whole purpose of money is to deal with stuff, and people dealing with stuff, etc.
Right now theres less stuff in the system than before, but more money. We’re stuck with inflation for a while until we make new stuff (like factories) that allows us to make new stuff (things people want). The alternative to inflation in the current stuff-shortage is have lots and lots of people not work and be too poor to buy stuff. But then they aren’t making stuff, and we’re never getting that lost time back when people who could have made stuff did not, and the real actual real economy is poorer.
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