Post
Topic
Board Economics
Re: Were the Keynesians wrong?
by
dinofelis
on 25/01/2015, 10:34:14 UTC
Deflationary prices cause people to put off spending.  Both consumers and business, so there is danger of deflationary spiral.  Rampant inflation is also not good but mild inflation provides enough incentive for spending which stimulate economic activity

Mild deflation causes people to put off SOME spending, in the same way as mild inflation causes people to put off SOME saving.

If mild deflation causes a deflationary spiral, then mild inflation causes hyperinflation.  They are each others' dual.