arcticbull said '... you would have been a lot more furious at the Fed in the event they had sat back during COVID and presided over a deflationary spiral ...'
Deflation makes cash have more purchasing power, so arcticbull your speculation is wrong. Completely backwards.
I suspect anything in between would have led to a huge spike in interest rates making borrowing yet less affordable no?
> Deflation makes cash have more purchasing power, so arcticbull your speculation is wrong. Completely backwards.
>> Can't get a mortgage if you're out of work, ya know?
So no, not really... unless you stopped reading before you got to that sentence ;)
"stagflation" is simply what happens when inflation keeps up with deflationary trends. It doesn't mean monetary policy is doing nothing. It likely means it's working as intended.
> Japan has had serious struggles fighting off deflation
But the CPI in Japan hasn't gone down, if anything it's gone up more years than it's gone down. Moreover, in what way is Japan terrible? Due to less inflation, there's less income inequality. Maybe deflation isn't bad.
In an inflationary economy, people spend their money quickly, since it's worth less sitting around. In a deflationary economy people hoard cash because the value of cash just increases in the bank. Why invest in anything (companies, labor, capital investment) if your money just earns 10% in the bank?
If enough people do that jobs disappear, as they realize they don't need to market any new product or service to make their money.
FWIW, they call that period in Japan "The Lost Decade(s)" https://en.m.wikipedia.org/wiki/Lost_Decades_(Japan)
Austrians and the HN community talk past each other because it's not easy to get the latter (which I am a part of) to see that their large salaries in FAANG companies are partly due to the Fed largesse.
If currency loses 100% of value, it will be worth zero. A complete, 100%, total loss.
A 500% loss would be spectacular! And not possible using commonly accepted laws of the universe such as math.
A dozen peaches experience 100% deflation. They completely 100% go to zero. There are zero peaches. They are gone.
What would 500% deflation do? Using regular math and experiences with donuts and peaches, what happens at theoretical 101% deflation? And 500% deflation? How can something be reduced more than 100%, the point at which it already disappeared?
Inflation is about the loss of value, not deflation. 1£ today will be worth x£ tomorrow, where x < 1.
So for example, a 500% deflation just means that one dollar today buys $6 worth of whatever it could have bought in the past (my math might be off)?