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?
If you think your money is going to be able to buy more stuff next year, you're more likely to just not spend it, since you can buy more stuff next year. Repeated on a large scale, for a long time, and now you have an economy where people fundamentally don't spend money. Your economy stagnates, and companies don't form as often, and companies don't grow. As a result, you don't have as many jobs in your country, and the jobs you do have start the dwindle. People are spending less, but they also don't get raises, and unemployment rises. Quality of life goes down as your citizens gradually lose salary vs. cost of living.
This is the story of Japan. Japan has dealt with steady deflation over decades, and it's a large part of what has caused them to go from being the a world economic superpower in the 1980s to a declining country similar disposable income levels to Lithuania and lower than Poland.
If you'd rather have the living standards of a place like Latvia than the US, then you might prefer deflation.
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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?