(I’m American) Inflation is the rising cost of goods and services. Inflation constantly goes up by varying degrees. When economists say “inflation is decreasing”, that just means that the rate of inflation has slowed, not that inflation reversed.
If inflation is causing money to be less valuable over time, why would it be bad to have deflation? Would that not make my money more valuable? I’ve been told it would be very bad, but not in a way that I understand
In: Economics
One way that deflation is bad is that it potentially makes already existing loans ‘more expensive’.
Over longer time periods, cumulative inflation tends to make loans easier to pay off because towards the end of your 30 year mortgage, that last $100k you owe is worth less than $100k was worth when you first took out that loan.
Deflation could create the opposite conditions, where it gets harder to pay off a loan if the value of each dollar goes up.
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