[ford_o]

I have seen this opinion presented multiple times without any supporting facts. When did deflation in history lead to collapse of society? Japan is in deflation for a long time and the life goes on. On the other hand, the inflation in Germany lead to WW2, inflation was also at least partly responsible for the hunderd year war in Europe and the fall of the Roman Empire.

[toss1]

As another poster pointed out the Great Depression is a good example of deflation, and it is generally recognized that this was only cured by the massive expenditures of WWII.

Also Inflation vs Hyper-Inflationyper is a key distinction.

Ordinary inflation is relatively harmless, and the NET returns available tend to equalize at the actual growth rate of the economy. E.g., if inflation is 5%/yr the stock market is likely growing at 7.5%/year, yielding the same returns as if it were growing at 2.5%/year in a 0-inflation environment.

Hyper-Inflation is the killer - when inflation gets out of control, people lose confidence in the currency, which leads to the vicious cycle of needing to print more, which leads to lower confidence, etc.. Obviously, this is to be avoided nearly as strongly as deflation. It's why Volker raised the Fed Funds Rate to up to 18%, to killed the '70s inflation that threatened to run away. But even in the following decade it was typically 3-4%, as low as 1.1% and as high as 6.1%. Yet we're now seeing 3-4%, likely transient, and people are squawking like it's the end of the world.

[mensetmanusman]

Great depression when relying on gold. E.g. when the value of your money will always be worth more the longer you wait, everyone tends to wait at the same time and everyone loses.