“In addition to encouraging fiscal responsibility on the part of consumers, low but stable inflation (or even deflation) is also good for the long term economy, because it allows producers to know their costs. This predictability allows producers to generate reliable profits which will eventually result in a strong healthy economy.
Inflation is bad for the economy because economies built upon debt and encouraging consumers to go further into debt eventually crumble of their own weight. As more and more consumers get over burdened by debt, they declare bankruptcy, introducing uncertainty to the creditors and robbing them of their rightful income.” Read more.
“Which is Better: High or Low Inflation?”
Tim McMahon
InflationData.com, November 2009.
Image by m_bartosch / FreeDigitalPhotos.net.
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