What is better for a country: deflation or controlled inflation?

[marrcelo]

Controlled inflation around 2% is better. It helps the growth of the economy, reduces the weight of the debts and encourages people to consume, instead of holding the money. Already deflation looks good in the beginning because the prices fall. But in practice it discourages the consumption, increases the weight of the debts and can cause years of stagnation, like happened in Japan.

[uneng]

I think you nailed it with your own introductory post. Deflation is bad for the reasons you mentioned, while a low and stable inflation makes sure to keep society running well in a rhythm people can follow without going insane.

My biggest concern is with maintaining quality of goods accessible for people along the years, which is something not happening nowadays. Prices are increasing so fast that industry started decreasing the quality of the ingredients in order to remain competitive and affordable for the average citizen.

Question it, would the 2% yearly inflation be enough to allow the average citizen to have quality on his daily purchases, especially the ones related to food items?

[avp2306]

Controlled inflation around 2% is better. It helps the growth of the economy, reduces the weight of the debts and encourages people to consume, instead of holding the money. Already deflation looks good in the beginning because the prices fall. But in practice it discourages the consumption, increases the weight of the debts and can cause years of stagnation, like happened in Japan.

Deflation might be look good at the beginning, but this actually hurt the economy a lot. Because with this debts of countries doing it might became more heaver and people might spend less or totally stop and growth of the country might get affect on this.

Controlled inflation is actually much desired to adopt by most of economist, because with this the country could still support its investment, encourage more consumptions to people and they could able to pay their obligations and debts.

But yeah both is actually bad, but having control of the ongoing inflation are much better for growth and stability of the economy.

[Darker45]

Somehow, Bitcoin is closely associated with the Austrian School of economics. And so it's generally awkward to read supposedly Bitcoin supporters arguing for inflation, even controlled inflation. Controlled itself makes it even worse.

Inflation sounds better with how you put it because your supporting reasons are themselves the reasons cited to make inflation appear good. You aren't, therefore, challenging inflation from the outside. If you're talking of controlled inflation only within the context of Keynesian economics, then it will always be preferable.

[viljy]

According to the mainstream approach in economics, low inflation is considered normal. That is, this is the level of inflation that can be controlled using monetary methods. Deflation, on the contrary, is considered very dangerous. Therefore, after the 2008 crisis, the economy was flooded with money; the same measures were taken during the COVID‑19 epidemic.

Is this attitude towards deflation correct? In conditions where the economy would simply die without constant growth, it may be correct. However, pumping money into the economy also has its dark side: for example, market bubbles, which always burst and cause great damage. Because most often, cheap money doesn’t go into real production but follows the simplest path - into the financial market.

[Zlantann]

Acute deflation could devastate an economy. It causes the value of a currency to increase, which would discourage spending or investment. Japanese companies began cutting wages and other investments because holding cash became more profitable. The economy will be at a standstill when the manufacturing and other productive sectors are discouraged from producing goods since people are not willing to spend. It would cause unemployment and more expensive debt, which would harm the economy.

Mild inflation stimulates economic growth as people are encouraged to spend rather than delay it. Businesses increase production or expand their activities as inflation reduces the real value of debt. It also reduces unemployment as increased business activities lead to the creation of more jobs.

Controlled or mild inflation is more beneficial to the economy.

[_act_]

The best is inflation or deflation that is not small in a way it is not noticeable on the economy. If there is inflation, the inflation should not be high at all or too high and it should not be hyperinflation. If deflation is also not too much, it will be good for the economy. If inflation or deflation are too much, it will have negative effect on the economy. But the bad thing is that most countries prefer inflation that is noticeable which the government always use to scam their citizens.

[YOSHIE]

What is better for a country: deflation or controlled inflation?

If you are one of the leaders of a country, say the president, if your country is experiencing both problems of inflation and deflation, in my opinion, don choose deflation, you should consider controlled inflation so that the country you lead is economically a little more stable thandeflation.

The reason is that when you choose Deflation, many companies will lay off their employment, as a result the company assets will plummet without buyers, In a situation like this, the government finds it difficult to overcome the turmoil from domestic consumers/society itself. A situation like this will result in a serious recession in a country which is difficult to overcome.
It better if controlled inflation occurs, at least people have the desire and encouragement to invest and spend, at least even if inflation occurs, the wheels of the economy can turn and continue to run as usual, even if inflation occurs.

[demonica]

I think both inflation and deflation have its own benefits, as long as it is control and in moderate. A moderate inflation can help economic growth with more people willing to spend and invest. Which also means that businesses with generate more profit. While as for deflation, it also has its own benefits with people having more purchasing power and lower prices on goods or services.

Both can bring something good to the economy as long as it's not too much or isn't prolonged. Like what you've said, 2% inflation is better, but an excessive inflation will affect the economy negatively. This is also the same for deflation. A minimal deflation is fine, but a persistent deflation is bad for the economy.

[marrcelo]

The best is inflation or deflation that is not small in a way it is not noticeable on the economy. If there is inflation, the inflation should not be high at all or too high and it should not be hyperinflation. If deflation is also not too much, it will be good for the economy. If inflation or deflation are too much, it will have negative effect on the economy. But the bad thing is that most countries prefer inflation that is noticeable which the government always use to scam their citizens.

Most of the central banks adopt the target of controlled inflation around 2% exactly to avoid the extremes. They dont want neither hyperinflation nor prolonged deflation. Even knowing that a light and temporary deflation is not necessarily bad, the experience shows that uncontrolled inflation is much more destructive for the economy. For this they prefer to keep a low and predictable inflation, instead of running the risk of falling in one of the two extremes.

[drangos]

I believe that the 2% is only achievable if wages are able to match it. However, other times, even ‘controlled’ inflation will erode people's living standards. Important is not only that prices increase, but that real wages and productivity increase at a higher rate than the price rise. Mild inflation is much more readily accepted if productivity is increasing and wages are following suit. However, a 2% headline rate can be very tough for households if wages do not keep pace with the rising price of essentials.

[Rockstarguy]

There will always be inflation or deflation in a country as far as there is an economy, and the way the government goes about it can seriously affect the economy. If there is inflation, there are two things the government is expected to do: either work on the resources the country depends on, which could be due to poor management of funds related to those resources, or work on the minimum wage of the citizens.

There are some countries that are experiencing high inflation, but because the rate of unemployment is low and the minimum wage is not poor, inflation is not significantly affecting the masses.

[Findingnemo]

Deflation and not even stagflation is good for the economy that will affect the growth rate, less consumption that leads to less GDP numbers and many more so controlled inflation is good but how many countries in the world can achieve that? Just still with 2% inflation rate no matter what kind of bad thing happens because future is uncertain and it always throw us a lot of surprising events that needs to be handled immediately and when that happenes, government only solution is to print more money and apply a patch for that.

[348Judah]

Inflation is mostly common everywhere and this is why if you check on a 10-year economical statistics on inflation incidents on every country, you will hardly discover any significant deflation, what is wrong is about the system used and not the way it appears to us except the policies are being changed, we will definitely continue to have inflation all over the world except and alternative like decentralized network is considered.

[Fortify]

Controlled inflation around 2% is better. It helps the growth of the economy, reduces the weight of the debts and encourages people to consume, instead of holding the money. Already deflation looks good in the beginning because the prices fall. But in practice it discourages the consumption, increases the weight of the debts and can cause years of stagnation, like happened in Japan.

If you consider that pretty much all central banks are targeting an inflation rate of 2-3% that should tell you about what the governors think is correct for the economy. Deflation causes weird things to happen and Japan was actually trapped in "stagflation" for a long time which often dipped into deflation. If you imagine that most people would prefer to see raises in their wages, as a sort of natural progression - even if they're only seeing that 2-3% on average now it's better than seeing no raise at all. We like to see prices fall and it's good in theory after years of oversized inflation, but it's better that wages see some equal spikes to balance things out and normalize the situation rather than prices falling but your money still buying less. Deflation can also make it harder to import things from overseas as the value of a currency faces continuous depression.

[slapper]

Inflation is not a neutral tax. People with real assets often come out ahead when prices are on the rise. Those with wage, savings accounts are quietly devoured. The economic outlook for 2026 around the world has remained very K-shaped for some time. Upper income groups have recovered and grown while middle and lower income groups are still losing purchasing power. When we say that inflation eases the burden of debts, it is true. But it serves primarily those who had the credit resources to get into productive debt in the first place.

In fact, there is a live debate right now amongst economists regarding the continued viability of the 2% target. Some serious people are proposing nominal GDP targeting, which would look at both growth and prices simultaneously, rather than simply at the number. Fed chair Warsh has been clear on 2%, but he is getting a fair amount of pushback from far from fringe voices.

So it would be like this in my mind. Deflation is really worse. Japan's 30 years experience should be enough proof. However, "controlled inflation is good" is only correct if the inflation control mechanism also contributes to the general health of the economy. If it does not, you have the inflation, but not the growth. Which is another form of trap.


Australia has been running hot for five years straight, sitting well above its own central bank's target band

[Spaceman1000$]

Controlled inflation around 2% is better. It helps the growth of the economy, reduces the weight of the debts and encourages people to consume, instead of holding the money. Already deflation looks good in the beginning because the prices fall. But in practice it discourages the consumption, increases the weight of the debts and can cause years of stagnation, like happened in Japan.

Deflation is really not encouraged in modern economic policies, this is because it affects domestic value chain and it weakens the countries currency on the international market. So instead of we to have a controlled inflation, I would rather allow the market forces to display its nature but i will encourage the government to subsidize essential goods and commodities in the market, this way it will help the market forces so naturally get its own balance without any interference, and it will to also help the end consumer especially if government is subsidizing the energy sector.

[leonair]

Controlled inflation around 2% is better. It helps the growth of the economy, reduces the weight of the debts and encourages people to consume, instead of holding the money. Already deflation looks good in the beginning because the prices fall. But in practice it discourages the consumption, increases the weight of the debts and can cause years of stagnation, like happened in Japan.

If the inflation rate cannot be reduced, it will never be possible to reduce the prices of goods. Even if it can be controlled initially, it will not be possible for a long time. The only way to keep the prices of goods low despite the high inflation rate is for the country to be productive. And that country has to produce a large number of goods. This is not possible for another country, of course it will have to import different types of goods from another country. In that case, if the currency depreciation rate increases, a lot of money will be spent on other imports, which will definitely have to be increased in order to reach the people of the country. Or the government will have to contribute some part to the price of that product. For the depreciation, a large amount of tax will have to be collected from the people or new currency will have to be printed. Therefore, if the inflation rate increases, the prices of goods cannot be controlled naturally. Therefore, a country should focus most on reducing the currency depreciation rate.

[Josefjix]

Controlled inflation around 2% is better. It helps the growth of the economy, reduces the weight of the debts and encourages people to consume, instead of holding the money. Already deflation looks good in the beginning because the prices fall. But in practice it discourages the consumption, increases the weight of the debts and can cause years of stagnation, like happened in Japan.

What keeps an economy going is inflation, and what brings new opportunity popping up too is inflation. Big changes are needed to emerge out new money into a system, that's why COVID 19 brought about more opportunities than ever before, brought about remote work and many other home staying jobs.

Deflation keeps the economy boring and not challenging at all, opportunities keeps been dead and never attract growth and upliftment.

It's better to regulate inflation than deflation, infact, every economy needs inflation to flow and then trying to stabilize the inflation to becoming reduce is more advantageous.

[mirakal]

Both are actually bad for the national economy, but going into deflation for long brings more disadvantages compared to the controlled inflation. With inflation, prices of goods and services are high, thus losing the value of our currency. On the other hand, deflation is when the prices are staying low which isn't good for long since it will affect the economy of the entire market, even if the currency gains value.

Inflation is no longer new to us, we all get used to it everyday, but it would be better on our part if it will be controlled. But with deflation, it will definitely cause severe economic pain if it happened for long, and might lead to economic collapse if things gone out of control.