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

[Synchronice]

Many people think that deflatino is good because prices go down, things get cheaper and they have the possibility to buy more but it doesn't really work like that in practice. Deflation means that by holding money, your purchasing power increases and you are basically getting rich by just holding, so there is no need to risk and invest in something or spend money.
So, small inflation is the best choice.

Because most people are already struggling and are tired of what inflation is doing to them, its no surprise that many people would rather have deflation than inflation.

With a deflationary economy, they would spend less, save more and get richer. But they dont realize its not that simple. When everyone wants to hold onto their money and puts off spending and investing, demand drop, businesses struggle and the economy can slow down. In the end, it can turn into vicious cycle that ends up hurting them too.

IMO, Inflation is still better than deflation.

Again, it doesn't work the way you think. If there is a deflation and prices are expected to keep falling, cash becomes more valuable and instead of spending, people will save and won't invest. Less money spending and less investment means that demand on products and services go down, profits fall and unemployment rises.
Also, don't forget the debt. If you owe a debt, inflation will make your debt expensive. As OP said, 2% inflation is better than 0 inflation.

[STT]

This is a fallacy but a nice delusion to excuse the excess debt erosion via currency debasement.  If 2% inflation could be kept to as a perfectly level known rate of change I could see the attraction in that but what has and is happening is variable inflation to 10% at times and only the idea of a target or grand hope of just 2% inflation occurring; there is an illusion of control that does not exist.

years of stagnation, like happened in Japan.

Japan suffered actual losses, currency effects is not a description of alteration in the GDP but the currency base so is separate from growth possible.  Japan has deflationary loss because there is less  business done by a falling working population and that change has been aggressive. The YEN currency so far as I know has expanded greatly, consumed in debt so they have inflation created by 36 years of QE programs and money printing.

[DYOR+BTC]

I've lived my whole life in a country with an inflationary economy, and it's the worst thing in the world. I don't recommend it—not even with 2% inflation, or anything like that. A stable economy, for me, is a deflationary one. In fact, Bitcoin's model is perfect.

Notice that Bitcoin has a limited supply, which only makes the currency more valuable over time. By limiting the supply, wealth increases because the value increases. Like everything, there are downturns, but then there are recoveries. In the end, a deflationary economy is much more effective because it eliminates many of the deficiencies and vulnerabilities that the current system has.

Yes the bitcoin operational system is a perfect economic type for every nation willing to improve. The scarcity in bitcoin makes it more valuable, expensive and important, so nations experiencing such economic situations will do better than the once with constant inflation without control.  Just like what I have grown with all my life, in my country inflation is like an economic activity that must be experienced not that it is useful to we citizens but our leaders don’t work towards controlling it and it has made life very difficult in my country to an extent surviving in my country is worst than surviving in hell

[Swordsoffreedom]

I've lived my whole life in a country with an inflationary economy, and it's the worst thing in the world. I don't recommend it—not even with 2% inflation, or anything like that. A stable economy, for me, is a deflationary one. In fact, Bitcoin's model is perfect.

Notice that Bitcoin has a limited supply, which only makes the currency more valuable over time. By limiting the supply, wealth increases because the value increases. Like everything, there are downturns, but then there are recoveries. In the end, a deflationary economy is much more effective because it eliminates many of the deficiencies and vulnerabilities that the current system has.

Yes the bitcoin operational system is a perfect economic type for every nation willing to improve. The scarcity in bitcoin makes it more valuable, expensive and important, so nations experiencing such economic situations will do better than the once with constant inflation without control.  Just like what I have grown with all my life, in my country inflation is like an economic activity that must be experienced not that it is useful to we citizens but our leaders don’t work towards controlling it and it has made life very difficult in my country to an extent surviving in my country is worst than surviving in hell

Can Bitcoin really help country's economy, and would adopting it actually help that country develop? Honestly, Im pretty skeptical about that.

Remember El Salvador? They didnt just invest in Bitcoin, they also brought it into their economy. But you know what? After 4 year of adopting it, their economy not only failed to improve, it also came close to defaulting. In the end, they had to reach a deal with the IMF to save themselves.

Bitcoin is pretty good at fighting inflation and preserving wealth on a personal or small scale. But that doesn't mean that adopting it at the national level will bring the same benefit to a large economy like country or the whole world.

[Royal Cap]

Although controlled inflation of 2% sounds good for the economy of a developed country but it is almost impossible in our country's context. Inflation here never stays at 2%, rather, due to syndicates or various reasons, the prices of daily necessities increase by 20-30% in one go. However the salary of an ordinary employee does not even increase by 5% a year. When I go to the market, I can see how the prices of daily necessities increase so rapidly that it becomes impossible to match the income with the expenditure. The common people do not really care about these big theories of economics, they just want the prices of goods to remain stable and the pressure of loan installments on them to reduce a little.

[o48o]

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.

Why would anyone think that deflation be beneficial to economy? It can be beneficial to someone who has invested to an asset that's deflationary, but that's opposite of helping an economy.

I know that many people here are against Keynesian / New Keynesian economics but personally i see it as best possible way to keep on economy going. Fiat money should have different attributes then something like bitcoin.

[Haunebu]

The answer is pretty obvious and you mentioned it yourself op. Problem is that it's not at all easy to control inflation anywhere around the world due to a wide variety of factors. Just look at what one factor(COVID) did just sometime ago causing rampant inflation everywhere.

World banks intervene all the time to try and control it, but there's only so much they can do. Deflation is even worse in comparison. I feel the world needs an even better solution though that's easier said than done.

[danherbias07]

There's still always a chance in controlled inflation. If a year or two is good, it will somehow recover some of what is lost. I have seen many times when different countries encouraged spending their money and not just saving them all. If every person is just waiting for the prices to fall (deflation), it could cause a lot of harm in the economic system of a country. Sure, the items get cheaper, but it could also mean losing a lot of jobs since companies are not making enough to pay their employees.

I think controlled inflation is still the better choice.

[BlackHatCoiner]

Deflation, even in small percentages, is destructive;

You don't really believe that Keynesian nonsense propaganda that a little bit of inflation is "good and healthy" for an economy, and that deflation would bring it into total destruction, right? You do understand this whole deflationphobia is a psyop to justify money printing, right?

I mean I can't believe there are Bitcoiners into this place for a decade who still can't fully grasp what problem Bitcoin solves.

[stompix]

Deflation, even in small percentages, is destructive;

You don't really believe that Keynesian nonsense propaganda that a little bit of inflation is "good and healthy" for an economy, and that deflation would bring it into total destruction, right? You do understand this whole deflationphobia is a psyop to justify money printing, right?

I don't have to believe anyone..
I only have to look at Japan who has been battling low key deflation to see what happens to an economy when it hits something like that!
The writing is on the wall for everyone who thinks goods getting cheaper is the way to go!

I mean I can't believe there are Bitcoiners into this place for a decade who still can't fully grasp what problem Bitcoin solves.

Bitcoin was NEVER designed to solve economic problems! Nor will it solve them!
Currently, the greatest achievement is the increased growth in tinfoil production and consumption!

Open your eyes and see why we have basically zero economic transactions on Bitcoin and nobody is spending their coins, using USDT instead, and that is because they think the coins will get a higher value down the line; now do this for fiat, and once you drop your biased view, you can see what will happen.

[BlackHatCoiner]

I only have to look at Japan who has been battling low key deflation to see what happens to an economy when it hits something like that!

Japan is the example everyone reaches for and it's the one that falls apart fastest under inspection. Japan's working-age population peaked in 1995 and has been shrinking roughly 1% a year since. Measure real GDP per working-age adult instead of aggregate GDP and Japan's performance from 2000 onward is in line with the US and ahead of most of the eurozone.

And what exactly is "destroyed" about Japan? It has top-tier standard of living.

The writing is on the wall for everyone who thinks goods getting cheaper is the way to go!

You're just another victim of this psyop that conflates the deflationary spiral argument in a debt-based system with natural deflation that occurs because of productivity rising in an equity-based system. Yes, in a debt-based system, deflation is destructive because the debt becomes even more difficult to pay back as times goes by, and this inevitably leads to bankruptcies and a stagnant economy. But the Keynesian mind takes this and extrapolates it so that any kind of decline in prices is considered bad and will "discourage spending", which is simply not true.

When goods and services are increasing, as productivity increases and technology advances, if the money supply remains the same (such as in a gold standard), it's completely natural for prices to fall, and there's absolutely nothing destructive about that. People will not starve today so they can buy 1.2x pork next year. Technology advances so rapidly that electronics often decline in price; yet you still buy a laptop when you need it, and don't wait for 10 years to buy it 50% cheaper.

Nor will it solve them!

It certainly protected me from the 2020 pandemic money printing!

[stompix]

You're just another victim of this psyop that conflates the deflationary spiral argument in a

Yawn...
Yeah, we know, the reptilians, the masterminds behind everything, are ruling the entire universe except you, the only person on the planet smart enough to...whatever..
Yup...been there, done that, it's getting boring!

[BlackHatCoiner]

Yup...been there, done that, it's getting boring!

I'm not talking about conspiracy theories, because I know there cannot be a constructive conversation. However, the deflationphobia is probably one of the dumbest takes, with all due respect. Imagine believing that allowing some non-elected bankers print unlimited money and distribute goods/services in the economy is required or else the world is heading to self-destruction.

Open your eyes and see why we have basically zero economic transactions on Bitcoin and nobody is spending their coins, using USDT instead, and that is because they think the coins will get a higher value down the line; now do this for fiat, and once you drop your biased view, you can see what will happen.

The point of hard money is primarily to be hoarded through uncertain times. The idea that Bitcoin should be used to buy iced-coffee or else it failed just belongs to the past.

[The Cryptovator]

I can’t think about the deflation right now based on the current economy. Because it’s become quite complicated to control the inflation. So controlling inflation is better for the economy. In my country the inflation rate is high every year, with more debits driving more inflation. So if my country can control the inflation, then our economy will be better.

We all just need to just not increase the daily needs products. So it’s possible only by controlling the inflation. Decreasing the price by deflation won’t be suitable right now; that would drive more problems. For my country I would be happy if the government could control the inflation.

[boyptc]

Although controlled inflation of 2% sounds good for the economy of a developed country but it is almost impossible in our country's context. Inflation here never stays at 2%, rather, due to syndicates or various reasons, the prices of daily necessities increase by 20-30% in one go. However the salary of an ordinary employee does not even increase by 5% a year. When I go to the market, I can see how the prices of daily necessities increase so rapidly that it becomes impossible to match the income with the expenditure.

I think that many employees from different countries are experiencing that. Due to the bad economy, their companies can't even afford to increase the salaries of their employees.

And that's why if they leave the job to find a better paying one, another problem occurs and that's about the high rate of job unemployment.

So, they stick to their current jobs despite that there's little to no increase of annual salary.

The common people do not really care about these big theories of economics, they just want the prices of goods to remain stable and the pressure of loan installments on them to reduce a little.

True, what matters is if they can survive and bring food to their table.

[LUCKMCFLY]

Yes the bitcoin operational system is a perfect economic type for every nation willing to improve. The scarcity in bitcoin makes it more valuable, expensive and important, so nations experiencing such economic situations will do better than the once with constant inflation without control.  Just like what I have grown with all my life, in my country inflation is like an economic activity that must be experienced not that it is useful to we citizens but our leaders don’t work towards controlling it and it has made life very difficult in my country to an extent surviving in my country is worst than surviving in hell

There's no doubt about it; in fact, El Salvador is a clear example of a country that is functioning increasingly well with the integration of Bitcoin into its economy. This has been a very relevant topic in the local Spanish-speaking board, where a lot of emphasis is placed on the situation in high-inflation countries. In these regions, most people prefer to operate with stablecoins because they're dealing with a stable currency, allowing them to gain some ground against rampant inflation.

I've always said that if a country integrates Bitcoin into its economic system, perhaps its local currency could actually be sustained over time.

[BlackHatCoiner]

Decreasing the price by deflation won’t be suitable right now; that would drive more problems. For my country I would be happy if the government could control the inflation.

Your elected government cannot really control inflation caused by the monetary expansion (which is the real deal), unless it controls the money supply of the currency. In EU, that is not possible, and for the countries that do have "sovereign currencies", they are usually hyperinflated or soon to be, because printing money is panacea for enriching cronies.

But besides this, what problems do you think deflation would cause in your country?

[Juse14]

I can’t think about the deflation right now based on the current economy. Because it’s become quite complicated to control the inflation. So controlling inflation is better for the economy. In my country the inflation rate is high every year, with more debits driving more inflation. So if my country can control the inflation, then our economy will be better.

We all just need to just not increase the daily needs products. So it’s possible only by controlling the inflation. Decreasing the price by deflation won’t be suitable right now; that would drive more problems. For my country I would be happy if the government could control the inflation.

Actually, it will not be a problem when inflation occurs but people's income also increases, because in the law of the financial system now ifnlasi will always exist, the government will continue to print money therefore the increase in inflation must be balanced with people's income so that they can still spend and rotate the economy.

Deflation means pulling money out of people's pockets that cause them to dry it is not a solution, moreover, the money turnover only boils down to some industries that will only strangle the lower classes, it will be very sad to see.

[Princess Leah]

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.

That's true, if the price of things keep falling yearly due to deflation there would be less demand causing people to spend less since they can wait and watch things go lower before buying, such would make many companies to collapse cause they're not making profits but losing due to less demand of their products and lack of funds to pay workers.

 But with controlled inflation, people would see reasons to spend csuse if they don't the opportunity of buying good cheaper mind be gone due much demand of the particular goods, it would create a balance and boost the economy.
 

[EarnOnVictor]

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.

This makes sense! So long as it is kept controlled and low, inflation is a better choice than deflation, and central banks often make sure of that in a healthy economy. Your example of 2% controlled inflation rate is generally considered good because it encourages consumer spending, investment, and economic growth. This is unlike deflation that discourages spending, which could retard the economy.