US core inflation raises .3 points, to 2.2%

Lmao, discourage present day spending?

Yes, that's the effect of deflation. It decreases spending and investments. Every historical instance of deflation has had this effect.

Americans pay for vacations on credit cards!

Banks lend less during deflation, because the value of the debt burden that consumers hold increases along with risk. Deflation = More debt defaults. If you are carrying $50,000 in debt today, do you want that debt to be worth more or less as you continue to pay it off? What happens in a deflationary spiral is worker wages (and employment) decrease while the value of their debt increases.

You think people are just not going to eat because deflation?

They consume less during deflation. That is a hard-in-stone historical fact that follows every single instance of deflation. Did people eat during the Great Depression? Sure, but maybe not as much. Some starved. Some got by with less means.

American had massive deflation from the 1800s to 1900s and had absolute robuste growth

LOL! That's a time period of more than a century which includes the largest and longest depressions our country has ever experienced. Historically, the correlation between deflation and recession/depression is positive.

  • Depression of 1807.
  • 1815 - 1821 Depression.
  • Panic Of 1857.
  • Panic of 1873.
  • Panic of 1893.
  • The Great Depression (1929 – 1939).

And regarding Japan and other governments. They use inflation to monetize government debt PERIOD.

No, you're clearly very confused about the purpose of target inflation. Monetization of debt can be a tool to achieve target inflation, which maintains price stability in a growing economy. In which instance price stability is the goal and monetization of debt is merely the means to that end.

/r/investing Thread Parent