Low inflation might be the first step towards deflation. Many economists would argue that deflation is a worse situation for the economy because it leads to a sharp drop of consumption and therefore a huge recession follows?
you got the numbers wrong. At 5% productivity increase, you'd need 10% deflation to justify that pay cut. At 5% deflation, there's no pay cut at all. And at 5% inflation, the pay cut is hidden, because the productivity increase is funneled away from you.
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u/StuartMcNight 9h ago
Low inflation might be the first step towards deflation. Many economists would argue that deflation is a worse situation for the economy because it leads to a sharp drop of consumption and therefore a huge recession follows?