▲ | mdnahas 19 hours ago | |
Economist here. No, you don’t want that. Inflation is annoying, but deflation is destructive. When that happens, people hold on to money as an investment and it doesn’t flow in the economy. The Great Depression was caused by deflation. (See Milton Friedman and Anna Schwartz’s A Monetary History of the US.) As a result, central banks try to have a little inflation, so that random mistakes don’t push us into deflation. The Fed’s target is 2%. I think it should be a little higher. (See Fischer Black’s “Interest Rates as Options” and the shadow short-term rate.) No one should be holding inflating dollars over the long term. That money should be invested in loans (bonds, mortgages, …) or equity (stocks, real estate, …). We have good ways of comparing investments over time by removing the inflation. These are CPI or the GDP deflator. | ||
▲ | mdnahas 19 hours ago | parent [-] | |
P.S. Half its value over 25 years is extremely stable if you look at the history of money, especially fiat money. It halved in value in 9 years, from 1974 to 1983. |