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

[Botnake]

Inflation is good once controlled, but hyperinflation is damaging at all. Deflation and hyperinflation are equally the same, they bring out the massive negative outcomes that would damage the whole national economy. So I think I would just settle with just controlled inflation, as 2% steady rate can still support economic growth.

But if the country can avoid inflation, why not? The people will benefit a lot, and the entire economy will grow undoubtedly. Just a big NO for deflation. Yes, its giving us a higher value of our money, but it also harm the sales and profits of our daily goods and services and make the whole business market suffer.

[Smack That Ace]

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.

There are many reason why inflation happen, like supply and demand getting out of balance, rising energy prices and supply chain disruptions caused by war, pandemic...Its not just about excessive money printing or bad monetary policies. So replacing fiat with a decentralized currency with a fixed supply wouldn't solve inflation either. It could even create more problems for the economy than the benefits it brings.

There's a reason the world moved away from the gold standard. So the idea of using a decentralized currency might sound good, but in reality, it doesn't solve the root of the problem.

[Yeesha]

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.

There are many reason why inflation happen, like supply and demand getting out of balance, rising energy prices and supply chain disruptions caused by war, pandemic...Its not just about excessive money printing or bad monetary policies. So replacing fiat with a decentralized currency with a fixed supply wouldn't solve inflation either. It could even create more problems for the economy than the benefits it brings.

There's a reason the world moved away from the gold standard. So the idea of using a decentralized currency might sound good, but in reality, it doesn't solve the root of the problem.

But still, inflation is better than deflation, especially when deflation is caused by a very weak economy. Because if deflation occurs without increase in the salary rate it still doesn't solve our problems, especially when someone is a low salary earner, lose their job, or jobless from the beginning. Gradual reduction in the rate of inflation can only stabilise the economy if government makes new plans for the growth and development of the country. When listing the conditions that causes increase in the rate of inflation, I think money printing or bad monetary policies will be among the last ones that would be listed.

[Call_Me_Guru]

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.

Your economic views are mostly accurate on this, I agree, but don't be too confident about the saying that 2% inflation is automatically “better” or that inflation itself creates economic growth. The main point is that a low and stable  inflation is healthier for an economy than persistent deflation because deflation increases the economic burden of existing debt and can encourage people to delay spending. But inflation does the opposite.
That doesn’t mean inflation automatically leads to more growth since consumption and investment depend on many other things that are broader

Your Japan example is good, just that its long stagnation wasn’t caused by deflation alone, we need to separate that. The aging population, weak demand, real estate problems and others were contributing. An example is the late-1980s bubble in Japanese stocks and real estate burst, destroying wealth and leaving banks and businesses burdened with bad debts.
My knowledge about this suggests keeping inflation low and stable around 1.5–3% is preferable to persistent deflation, but inflation is not what creates economic growth.

[BlackHatCoiner]

Ah yeah, the classic Keynesian textbook pitch. "Your money melting is a feature, not a bug." Are there people who still believe this BS?

Deflation only "discourages consumption" of useless garbage. People still buy stuff they actually need. Nobody starves and waits for 5 years to buy a laptop just because it might be 2% cheaper later.

If you're really "concerned" about deflation destroying the world, ask an OG Bitcoiner to describe you how "bad" his life has been since 2013.

[Sim_card]

High inflation is bad because it will make money lose value faster and that will lead to more printing of money by the government. It causes hardship because your own income wouldn't increase. While high deflation kills the economy because citizens will hoard their money waiting to buy cheaper products reducing the amount of funds in circulation. A bit of inflation or deflation has no impact on the economy.

[Cryptomultiplier]

Inflation is good once controlled, but hyperinflation is damaging at all. Deflation and hyperinflation are equally the same, they bring out the massive negative outcomes that would damage the whole national economy. So I think I would just settle with just controlled inflation, as 2% steady rate can still support economic growth.

But if the country can avoid inflation, why not? The people will benefit a lot, and the entire economy will grow undoubtedly. Just a big NO for deflation. Yes, its giving us a higher value of our money, but it also harm the sales and profits of our daily goods and services and make the whole business market suffer.

Deflation makes things far cheaper to produce and afford but in the long run, it is dangerous for the macro economic stability at large than a mild inflation ever could.
Also, fixed liabilities become of less value overtime with controlled inflation, but it is way better than deflation mostly as it concerns a country that has serious debt load to cover.

[blockman]

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.

Just like Bitcoin, it's a deflationary asset which encourages everyone to hold and we're all optimistic with its future. And so, we're trying to spend less of it. And that's the same with this description about which one is good. I think if it's with my country, I'll like to see a more controlled inflation. Because what we're experiencing right now is a rapid inflation although as said that we're now classified as an upper middle income by the World Bank. But it's still far from the reality when a normal person feels the inflation and struggles in day to day living.

[programmer3666]

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.

I will say a small dose of inflation kind of keeps the economy moving to a large extent. Let me use a case of a business loan in a country like Nigeria where inflation is like a birthright for us. Imagine a market woman in a city like Lagos who takes a huge loan to expand her business, if smal amount of inflation hits, then it makes it a bit easier for her to payback the debt she owes over time because her daily sales and cash in flow will also grow. But if it was deflation on the other hand that happens then the price of things crashes down and her business will start to lose some money, then she won't be able to pay back her loan as quic as she would prefer.

[DYOR+BTC]

High inflation is bad because it will make money lose value faster and that will lead to more printing of money by the government. It causes hardship because your own income wouldn't increase. While high deflation kills the economy because citizens will hoard their money waiting to buy cheaper products reducing the amount of funds in circulation. A bit of inflation or deflation has no impact on the economy.

With the world's current economic situation today,  I will say high inflation is worse than deflection as mentioned above,  over the years most countries are facing serious security challenges that has contributed to the uncontrollable inflation that has made life hard and terrible for citizens. At some stage deflection can be controlled with some high quality strategies which will never work in that of inflation because all the system supposed to do so have be eaten up by high cost of living.  Because of how dangerous inflation is, i don't pray for any nation to experience it.

[Churchillvv]

If debt is an anchor for the economy of a county then inflation is well needed for the state to thrive keeping the debt and inflation side by side to keep the economy afloat, while the remover of debt can therefore reduce inflation to the point where it’s not longer found and hence become deflation which is not good for a centralized economy. In economics debt is used as instrument for a state hence inflation is the drive for debt in check so both needs to exist in an economy to be sustainable, like the USA, high in debt but inflation is manageable but not really in the best condition compared to other countries. But it’s a perfect example of inflation and debt is check.

[lombok]

High inflation is bad because it will make money lose value faster and that will lead to more printing of money by the government. It causes hardship because your own income wouldn't increase. While high deflation kills the economy because citizens will hoard their money waiting to buy cheaper products reducing the amount of funds in circulation. A bit of inflation or deflation has no impact on the economy.

With the world's current economic situation today,  I will say high inflation is worse than deflection as mentioned above,  over the years most countries are facing serious security challenges that has contributed to the uncontrollable inflation that has made life hard and terrible for citizens. At some stage deflection can be controlled with some high quality strategies which will never work in that of inflation because all the system supposed to do so have be eaten up by high cost of living.  Because of how dangerous inflation is, i don't pray for any nation to experience it.

The standards of living of the working people are being killed by the wild increases of basic commodity prices. Cases of national instabilities are accelerating the shortage of the strategic commodities, doubling the day to day costs burden. Citizens' misery is exacerbated when savings drastically lose their spending power.

The termination of consumption when the price falls drastically also puts millions into bankruptcy and layoffs. The control of markets involves stability in supply of the goods and monetary control. Pure destruction of standards of living of people has to be prevented at all cost and synergy in production management is the key to it.

[Sanitough]

Where there are chances for the people and the country's economy to consistently grow, that would be the one better for the country. But deflation comes with no positive outcome, because its not just a mere sale or price discount in a given time, but if deflation is happening longer, then the whole market system will suffer and the people who are in business will end up drown in heavy loans.

Controlled inflation may not be totally good, but compared to deflation, I would rather stick with inflation. As long as there are no signs of hyperinflation, then the people are still safe, the national economy will still have chances of growing.

[348Judah]

When there is always a continuous attempt to printing of Fiat currency, then we can do without the incidence of inflation in the economy no matter how perfect it has always been running, take a look at the United State of America and also discover how they have been in debts, let's play the fact that they are well-known and have a strong economy and influential power, they are still in debt, this shows that the policy does not really fit in the way we operate the economy and except there is a change,, things will always remain the same with the incidents of inflation everywhere.

[CryptoBuds]

High inflation is bad because it will make money lose value faster and that will lead to more printing of money by the government. It causes hardship because your own income wouldn't increase. While high deflation kills the economy because citizens will hoard their money waiting to buy cheaper products reducing the amount of funds in circulation. A bit of inflation or deflation has no impact on the economy.

With the world's current economic situation today,  I will say high inflation is worse than deflection as mentioned above,  over the years most countries are facing serious security challenges that has contributed to the uncontrollable inflation that has made life hard and terrible for citizens. At some stage deflection can be controlled with some high quality strategies which will never work in that of inflation because all the system supposed to do so have be eaten up by high cost of living.  Because of how dangerous inflation is, i don't pray for any nation to experience it.

I understand what you're saying. The current economic situation is really bad. Inflation is eating away at our purchasing power and making life harder.

But believe me, uncontrolled deflation is far worse. On the surface, deflation sounds good for consumers, but its not so simple. When consumers put off spending and firms bring production levels down, this causes a fall in demand leading to job cuts…unemployment increasing.
On top of that, deflation makes the real burden of debt heavier. This can lead to more defaults, put pressure on banks, and push the economy into an increasingly serious downward spiral.

Most of us have never experienced deflation, so we tend to think it's better, but in reality, it can be much worse than inflation.

[AprilioMP]

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.

Which is better? controlled inflation.
Low inflation can increase people’s purchasing power, whereas deflation, in the long run, can devastate a country’s economy.
It is better if both are kept under control and remain stable so that everyone in each country is spared from adverse effects, ensuring that economic activity proceeds without disruption.

[Ayers]

When there is always a continuous attempt to printing of Fiat currency, then we can do without the incidence of inflation in the economy no matter how perfect it has always been running, take a look at the United State of America and also discover how they have been in debts, let's play the fact that they are well-known and have a strong economy and influential power, they are still in debt, this shows that the policy does not really fit in the way we operate the economy and except there is a change,, things will always remain the same with the incidents of inflation everywhere.

there are many causes of inflation, and even if we stopped printing money, inflation could still happen. history shows that inflation was pretty common even under the gold standard.

printing money isn't necessarily a bad thing. it only becomes harmful when its done recklessly, faster than the economy can grow.

the issue isn't just about printing money, but also about how it's used. when government keep expanding spending for political purposes, war or other thing that don't create enough value in return, it can make both inflation and public debt worse. this isnt just a problem in the US either. the same thing can happen in many other countries.

[liasbaa]

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.

The government can increase the liquidity of the fund in case of emergency. It can increase inflation by a few percent without increasing the amount of foreign debt. Japan was an example of a country where excessive deflation or excessive inflation both damage the financial structure. In the seventies, the price of goods in Japan increased manifold due to the effect of excessive inflation. To quickly curb that situation, the Japanese government adopted a policy of strictly adhering to the policy of monetary contraction, as a result of which the price of every product decreased. The country could not keep this policy in effect for long because the policy of the central bank of that country, which reduced the flow of money by increasing the interest rate in stages, severely damaged the country's economy.

[Jubilee58]

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?

What every citizen of a country needs is stable economy, and this means ensuring the currency gains value, and goods, and services are affordable. Every good governance encourages low cost of living for every citizen, and not only for the rich or political class that can afford whatever they desire. Inflation is bad especially the type that is prolonged. When an economy faces prolonged inflation, it causes many economic instabilities, it can cause hunger, lead to crime, lead to many economic havoc, while stable economy will help in boosting economic growth, welcoming investors from diverse places, and make the country gain enabling environment for business, and other economic activities to grow.

[Muba20]

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 inflation increases and it is under control, then it is good. But deflation is not at all beneficial for the economy. When inflation increases under control, people accept it and continue to move forward accordingly. There is a tendency to buy necessary goods and spend. But when deflation continues to increase, there will be a tendency for everyone to increase more, which will destroy the tendency of people to spend. If people do not spend, then the wheels of the economy will stop. People's business will decrease. Production will be disrupted. In all aspects, a bad situation will be created for the country's economy. That is why controlled inflation is definitely better than deflation. However, if inflation goes out of control again, the situation will again be bad. People's purchasing power will gradually decrease.