We could be wreaking havoc trying to reach the 2 to 3 per cent inflation target, writes business editor Ian Verrender. What if it's a goal that is unattainable?
Yes and no. I mean you can control inflation via expectations. Doesn’t seem to be the case so far. But in theory you could.
But it’s definitely the most sure fire way.
What I’m wondering is why are we so sure that deflation is always destructive. Sure deflation spirals are bad, but what evidence do we have that we must always have inflation?
For example Japan seems to function alright despite a moderately deflationary situation. It seems that if expectations are in check deflation isn’t necessarily that bad. In fact you could argue that deflation would lead to people feeling they need to save less for old age as they would not expect prices to be higher when retiring etc.
Plus is encouraging consumerism via inflation really that good of a thing?
Japan has the loosest monetary policy in the world, negative central bank interest rates, huge debt, big public spending, yet inflation hasn’t been above 4% for 40 years.
They also import all raw materials.
Actual monetary inflation is pretty bad. Sell everything to hoard worthless tokens of exchange… clearly something broken.
Yes and no. I mean you can control inflation via expectations. Doesn’t seem to be the case so far. But in theory you could.
But it’s definitely the most sure fire way.
What I’m wondering is why are we so sure that deflation is always destructive. Sure deflation spirals are bad, but what evidence do we have that we must always have inflation?
For example Japan seems to function alright despite a moderately deflationary situation. It seems that if expectations are in check deflation isn’t necessarily that bad. In fact you could argue that deflation would lead to people feeling they need to save less for old age as they would not expect prices to be higher when retiring etc.
Plus is encouraging consumerism via inflation really that good of a thing?
Japan has the loosest monetary policy in the world, negative central bank interest rates, huge debt, big public spending, yet inflation hasn’t been above 4% for 40 years.
They also import all raw materials.
Actual monetary inflation is pretty bad. Sell everything to hoard worthless tokens of exchange… clearly something broken.