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Something that I wonder

Visão libertária

Something that I wonder

digitado ⋅ 23 de março de 2025

Why is it that if the price of one good or service falls, we think it’s a good thing, but if the general price level falls, we deem it deflation and therefore bad?

Why are relative price decreases good but general price decreases bad? Why do we all agree that relative price decreases increase demand but general price decreases supposedly lead to lower aggregate demand? How does this make sense?

Also: how can you lower the cost of living while also targeting 2% inflation? Inflation by definition means the cost of living increases. You can’t lower the cost of living without having deflation, right? Lower cost of living = lower price level = deflation. But we are told our entire lives that deflation is evil and we need inflation…

So is (mild) deflation really as bad as we were told? Do we really need inflation, even if low? Something to ponder about

submitted by /u/technocraticnihilist
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