this post was submitted on 30 Dec 2024
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cross-posted from: https://lemm.ee/post/51182148

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[–] [email protected] 51 points 3 days ago (72 children)

Up until the 20th century it wasn't uncommon to have cycles of inflation and deflation.

https://iamkate.com/data/uk-inflation/

The reason deflation is so highly feared is because it increases the value of debt. In particular, government debt. China owns large parts of the debt of the US. Deflation makes them stronger.

[–] NIB 56 points 3 days ago (66 children)

Not exactly. Deflation basically slows down the economy. If you think your money will worth more tomorrow, then you are less likely to invest/spend them.

But the whole purpose of money is to be used. Money is a tool, the oil that facilitates trade and keeps the economy going. And while too much money(oil) can overheat the economy(inflation), too little money can straight up bring the economy to a halt(deflation).

Deflation, even in small amounts, is more dangerous, thats why ideally you prefer having a small amount of inflation.

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