| ▲ | steveBK123 2 hours ago | |
Right, a steady low level of inflation is a driver for risk taking, which drives investment cycle, hiring, etc. This cascades thru economy from firm to firm, in a virtuous cycle of growth. Zero inflation even as a target would be hard to hit, as it would imply some absolute perfect match of supply/demand for goods. Deflation leads to the opposite behavior - hoard your resources, don't invest, don't lend, don't hire. This then cascades through economy in a downward spiral. | ||