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Comment by recursive | Hacker News Reader

> people hearing news about inflation and thinking it means prices

Does it not mean prices? Anyway, prices are up. A lot of people are frustrated. I believed inflation was a measure of that, but if inflation is actually something else, it wouldn't make people any less frustrated.

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Inflation is the change in prices. We ideally want a little bit of it to get money moving around the economy. With stimulus checks and low interest rates, there was too much money chasing too little goods, causing prices to rise and YoY inflation went up to 10%. Rising interest rates brought inflation back down to where it should be. But the prices themselves aren't going to go down. That would be deflation, which causes money to stop moving around in the economy.

Money has to move around the economy for it to be a good one. Every single dollar you earn, someone else spent. Every dollar you spend, someone else earns. Deflation gets people to stop spending, which means people stop earning, which means people stop spending (since they have to tighten budgets or don't have money), which means people stop earning, and soon enough the economy goes in the shitter.

We've had extended periods of deflation exactly two times since we've had the means to start tracking it. The first time was called The Great Depression. The second time was called The Great Recession.

> With stimulus checks and low interest rates, there was too much money chasing too little goods, causing prices to rise and YoY inflation went up to 10%.

At least half the run-up in inflation was on the supply-side of things:

* https://www.frbsf.org/economic-research/publications/economi...

Or have people forgotten oil and food/wheat prices spiking (thanks Russia!)? (Clogged ports for goods didn't help earlier in the pandemic either.)

Deflation is not bad and is in fact good for savers. Moreover, deflation encourages less consumption which is good for the planet. I see you've been brainwashed into thinking the government needs to steal 2% of your wealth every year lest the economy will blowup.

> Moreover, deflation encourages less consumption

Where do you think your income comes from?

It doesn't mean prices in the same way that velocity doesn't mean position. We stopped moving North as fast, back near the speed we usually move North. That doesn't put us back where we were - we have to actually go South (deflation) for that, and there are reasons that's likely to be a bad idea even if people are mad about how far North we've recently come.

Huh. I never considered the possibility that people might think that prices would ever go back down to old nominal levels.

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