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?
At the top is hyper-inflation. This is bad because the end result is total collapse of the monetary system and a switch back to the barting system ("I'll give you a bag of apples to paint my fence"). Central banks will crash economies right into a depression to try and stop it.
Next is deflation. This grinds an economy to a halt as people hoard money, which can create a death spiral. My money is worth more tomorrow so I'm not going to spend it today, so companies lower prices since no one is buying but people then go "Ill hold even longer", so they lower prices again and so on. While doing this, lots of people lose jobs because no one is buying.
Next is stagflation or a period of high-inflation. Stagflation basically means no growth. Ask Japan how well that's gone for the past 30 odd years and periods of high-inflation can create a K shaped economy or just lower buying power in general, create a credit crunch. We've seen this since COVID.
Lastly is moderate inflation. This is where we want to be. Slow, steady growth YoY in the 1-3% range. Keeps everything moving forward.
That's a gross over-simplification of complex things but the general gist.
Why do low information people feel that their opinion is just as valuable as the economic experts who literally dedicate their entire lives to studying this? The rise of anti-intellectualism is what's going to kill this world.
Growth does not necessarily have to do with material resources, but is more often about efficiency and technology. 2. Infinite growth is not a requirement for capitalism as you can see from the past 35 years of Japan's existence which has seen zero growth
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u/StuartMcNight 8h 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?