fnu149

Pondering the 'Pain of Paying'

Thorax, the reason why a continuous deflation is not good because it creates no growth to the overall economy. Think of it this way. When deflation sustains, this means company are generate less sales volume and means lesser profits. Lesser profits -> companies don't need to hire as many people -> unemployment and so forth. You should get the idea. On the other hand, out of control inflation pace is not good too because people income growth most likely cannot catch up. Therefore, a modest inflation while accompanied by personal income & wealth growth is the best for the economy.