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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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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The best case would be the top 1 percent investing in Healthcare and other economic failures withing the world.

Reining inflation in, back to a healthy low level. High inflation is bad, but low inflation is strongly preferable to deflation, and overall very tolerable. The long-term goal is often around 2% annual inflation.

Curing bad cycles of inflation in the 1970s in the US required cranking up interest rates to the point of causing a sharp recession.

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.

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%.

Inflation isn’t bad.

Rapid inflation is bad.

The us had roughly 8% inflation in just one year.

That is huge. Most economist say 1-3% is healthy.

The idea is to not encourage people to horde money.

If you have deflation you are encouraged to not spend money. Rapid inflation you are encouraged to spend every dime you get immediately and things like buying inventory for shop keepers becomes incredibly risky.

Deflation would be catastrophic economically.