Which of these economic situations would you prefer to find yourself in?
A- Your salary is stagnant but prices fall. Where this happens, your real purchasing power has increased. It's called constructive deflation. And even if your salary falls, but prices fall faster, you are still ahead.
B- Having your savings taxed 2%+ a year by inflation.
Drop your thoughts
A- Your salary is stagnant but prices fall. Where this happens, your real purchasing power has increased. It's called constructive deflation. And even if your salary falls, but prices fall faster, you are still ahead.
B- Having your savings taxed 2%+ a year by inflation.
Drop your thoughts
I don't like the two. Money supply is a long chain that continues to increase and as that number continues to increase, there must be a general increase in price of goods and services, so I don't think there is going to be a way where price of things will remain the same in a year, there must be a change in price and stagnant salary is a bad idea for any working class person that depend on pay check.
In an ideal situation right, option A will help stabilized the economy but will there going to be growth without change, money will obviously be printed and more money into circulation means that we will be shifting from an ideal situations to real state and inflation definitely set in, you don't expect not to have inflation when you borrowed money recklessly and then print more money than what is remaining in as foreign reserve, it will never work.
For the fun of discussion. I will go with option A still.
B. THIS IS CURRENTLY HAPPENING
On situation A then there's now way that purchasing power has increased or would be having that deflation. If we do tend to make out some comparison about price of goods and services back in the past
then we would be able to see that huge gap about on how far we've been able to reach out or have become. So having this kind of condition will really be that impossible even into our dreams.
We would really be wishing this one but having knowing on how economics works then there's no way that we could really be able to apply such condition.
On situation B, then this is something which is inevitably happening.Whether we do like it or not inflation is something that could happen year by year.
