Inflation is actually a good thing as long as it is low and under control.
Deflation on the other hand kills the economy entirely. The velocity of money goes to zero which means nobody’s spending. If people don’t spend, companies will be firing their employees. The unemployment rate will skyrocket and people will starve themselves to death.
High inflation is bad too. This time people will be rushing to spend their money because money will be losing its purchasing power too fast. The velocity of money will skyrocket. The economy will get too hot. Pricing goods won’t mean a thing because the prices will change very fast.
Topic: Are Inflation and Deflation the Worst Economic Threats? - page 3. (Read 550 times)
I am not an economist but from the little I know about the economy, I have viewed inflation and deflation as factors that can destabilize a country's economy. But I often question myself if they truly the worst things that can happen to a country's economy. Are they? I know how inflation reduces the purchasing power of the people, while deflation decreases consumers spending and holds the economy stagnant. However, what about the other issues like high unemployment, political instability, and severe income inequality aren't they are as equally damaging or even more damaging than inflation and deflation? Do you think inflation and deflation are the ultimate threats, or should we consider other economic factors as potentially more detrimental?
inflation and deflation don't just happen by themselves, there are things that are responsible for inflation and they are more dangerous that the real inflation itself. Inflation basically is a product of factors like;demand-pull,
cost-push, and
inflation expectations which are not properly dealt with. The main issue is that the demand for commodity is more than the available commodity which cause an increase in the price of goods and so it's not about talking of inflation but ensuring that what has led to the inability to produce goods that will meet the needs of the people is worked on.
As long as a nation can work well on her dependence on locally made goods as well as ensuring that resources her out in place that will reduce the cost of producing those goods, inflation won't be a serious issue but untill that is being sorted out for, inflation is going to continue. What's the point here is that inflation is not the worst economic threat but rather, those factors that leads to inflation if left unfixed are the worse economic threats.
Most people don't mind their money depreciated overtime and inflation is needed in order to make banks survive, that's why low inflation is good for the government.
High inflation will make people scared, deflation make people to hold their money instead of spend it which make the economy not going well. That's why both high inflation and deflation are bad for the government.
Political instability is a case that can't be resolved and it's normal, different person will have different opinion, you can't expect everyone will say yes and everyone will say no, except you live in North Korea.
Income inequality isn't an issue, if you don't happy with your company, you can negotiate to increase your salary, if they reject it, you have an option to quit and looking to other company that want to pay you as high as you want.
High inflation will make people scared, deflation make people to hold their money instead of spend it which make the economy not going well. That's why both high inflation and deflation are bad for the government.
However, what about the other issues like high unemployment, political instability, and severe income inequality aren't they are as equally damaging or even more damaging than inflation and deflation?
Unemployment is caused by the citizen itself, they only want to work in something they like, same major that they taught when they were in school/university, and want to get paid high when they don't have many experience.Political instability is a case that can't be resolved and it's normal, different person will have different opinion, you can't expect everyone will say yes and everyone will say no, except you live in North Korea.
Income inequality isn't an issue, if you don't happy with your company, you can negotiate to increase your salary, if they reject it, you have an option to quit and looking to other company that want to pay you as high as you want.
A country's inflation rate is only as good or bad as its leaders and economic team and their decisions. Inflation isn't something that you can directly change. You can only do the things that you find necessary to hit your inflation target. Sometimes you miss. Sometimes you succeed. But it isn't a thing you directly manage.
So I guess the worst economic threat is making decisions, economic or otherwise that have impacts on the economy, that will damage the economy. The rate of inflation can only reflect a government's competence. Having the right programs and policies and implementing them well will result in reaching your desired inflation. Failure to do so may cause hyperinflation.
So I guess the worst economic threat is making decisions, economic or otherwise that have impacts on the economy, that will damage the economy. The rate of inflation can only reflect a government's competence. Having the right programs and policies and implementing them well will result in reaching your desired inflation. Failure to do so may cause hyperinflation.
isn't inflation literally the indicator to know that something is going on with the economy if all those you mentioned including political instability, pay wage gap and unemployment on the rise inflation will also affected.
I personally always considers inflation as something that sums up all those collaborative factors so its easier to judge. so if there's hyperinflation, the economy going the drain, if its just little inflation, its fine.
meanwhile if a country is so crippled economically and decide to get debt, its like a time bomb, eventually gonna explodes, because where they gonna get the money to pay back if the debt is not productive debt. the hyperinflation is imminent. often happened to country with high corruptions.
I personally always considers inflation as something that sums up all those collaborative factors so its easier to judge. so if there's hyperinflation, the economy going the drain, if its just little inflation, its fine.
However what you have said are actually correct and these are things that increase inflation and economy threats in the society, but there's another one which we are not paying attention to, and is called dept crisis. These is a things that will not end well if the government are not planning on how to settle the depts. However, if a country can't pays their dept because of the inflation it makes them borrows more and that's how depts keeps piling up and such things also decreases the growth of the economy in the country.
agreed with this, debt is also one way that become the culprit of economic threat, it also correlate with inflation, the key is that if a country trying to get a loan from other country they need to know their capability to pay back, the reason developed country have high debt because they also have high performing investment in various sectors or productive debt that could well pay all these debts if needed although not in one go but they have strong cash flow overall.meanwhile if a country is so crippled economically and decide to get debt, its like a time bomb, eventually gonna explodes, because where they gonna get the money to pay back if the debt is not productive debt. the hyperinflation is imminent. often happened to country with high corruptions.
Everything is interrelated, political instability will affect investors so that they can leave the country which will result in increased unemployment thus affecting people's purchasing power because they don't have money because they don't work, This happens in my country because every five years the political situation becomes uncertain because of elections, after that the government will start to increase their debt ratio to continue to be able to finance the country and so on, so it's once again interrelated, what damages a country's economy the most is when they have an incompetent leader and they are elected just based on likes and dislikes, and inflation and deflation are just words used by the government to say the condition of the country but actually they are not competent because he cannot lead.
The other issues that you've mentioned are actually a really good issues to deal with because once those issues are dealt with actually, they're the ones that would resolve the issue of hyperinflation, uncontrolled deflation, and uncontrolled inflation, more money for more people means that there's more spending for the economy and an economy that has more circulating economy is healthier because there's spending, I think that's the reason why there's big inflation, there's not a lot of people spending money because they're all saving their money because they don't have a lot to spare.
I am not an economist but from the little I know about the economy, I have viewed inflation and deflation as factors that can destabilize a country's economy. But I often question myself if they truly the worst things that can happen to a country's economy. Are they? I know how inflation reduces the purchasing power of the people, while deflation decreases consumers spending and holds the economy stagnant. However, what about the other issues like high unemployment, political instability, and severe income inequality aren't they are as equally damaging or even more damaging than inflation and deflation? Do you think inflation and deflation are the ultimate threats, or should we consider other economic factors as potentially more detrimental?
No other case can be worst than political tossle that may Leed to war, some sort of deases outbreak just like the COVID 19 and many other natural disaster like earthquake, tsunami or heavy flood. These are the things I see that are worst economy threat. Because when each of this happens it totally distablize the economy, making people to suffer. and sometimes people start afresh after losing all what they have labourd for many years. and some others may die due to the shock because they can't withstand the shock of starting afresh, expecially the tsunami, war or earthquake. So there are certain situations you will see, you'll prefer inflation. Not indirectly saying inflation is good but when people compare some worst case scenario, some may be better off than the others. 
I am not an economist but from the little I know about the economy, I have viewed inflation and deflation as factors that can destabilize a country's economy. But I often question myself if they truly the worst things that can happen to a country's economy. Are they? I know how inflation reduces the purchasing power of the people, while deflation decreases consumers spending and holds the economy stagnant. However, what about the other issues like high unemployment, political instability, and severe income inequality aren't they are as equally damaging or even more damaging than inflation and deflation? Do you think inflation and deflation are the ultimate threats, or should we consider other economic factors as potentially more detrimental?
However what you have said are actually correct and these are things that increase inflation and economy threats in the society, but there's another one which we are not paying attention to, and is called dept crisis. These is a things that will not end well if the government are not planning on how to settle the depts. However, if a country can't pays their dept because of the inflation it makes them borrows more and that's how depts keeps piling up and such things also decreases the growth of the economy in the country. 
IMHO, we won't go that far with how it happened with other countries. Yes, the other factors are there that you have mentioned. So it's a collaborative factor that made their economies down but still, the biggest factor that has ended their economy and pulled it down is inflation. It leads to hyperinflation and everything is so expensive and their main currency, the local currency has lost its purchasing power and toilet paper is much more valuable than theirs. That's one just one factor there that affects entirely the economy, as well as the politics that's happening in the country also plays a big part.
With inflation, they can just adopt other currencies and go on with their lives despite the rising prices of products. Unemployment also since companies will shut down.
Either of those things will make a country weak. If there is no military power right between the neighboring countries while the other is weak, it's the border issues that arise. One country will take advantage of the turmoil. The war with a neighbor is likely the worst that can happen.
As much as inflation and deflation are major factors in the economic threat, political instability is the worst.
Uncertainty in government policies, changes in leadership, or conflict can create the worst in the economy.
One of the major reasons for the hardship in our country, Nigeria, is bad government, if you may ask me.
The leadership method is so uncertain, and it's had a lot of bad effects on the citizens, which has contributed to making the youth and even other men go into things they vow never to do.
I believe inflation and deflation can be managed compared to an uncertain government where no one is ready to learn or listen to others.
Only the uncertainty government can cause debt, which is another factor, conflict, and also unemployment, which is the major reason I believe the uncertainty government is the worst factor.
With inflation, they can just adopt other currencies and go on with their lives despite the rising prices of products. Unemployment also since companies will shut down.
Either of those things will make a country weak. If there is no military power right between the neighboring countries while the other is weak, it's the border issues that arise. One country will take advantage of the turmoil. The war with a neighbor is likely the worst that can happen.
I am not an economist but from the little I know about the economy, I have viewed inflation and deflation as factors that can destabilize a country's economy. But I often question myself if they truly the worst things that can happen to a country's economy. Are they? I know how inflation reduces the purchasing power of the people, while deflation decreases consumers spending and holds the economy stagnant. However, what about the other issues like high unemployment, political instability, and severe income inequality aren't they are as equally damaging or even more damaging than inflation and deflation? Do you think inflation and deflation are the ultimate threats, or should we consider other economic factors as potentially more detrimental?
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