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<p>[QUOTE=&quot;medoraman, post: 948424, member: 26302&quot;]True that neither are perfect. But, the fact remains that low inflation in reality acts as an inducer for consumption. Even if someone tries to hoard necessities, most necessities are somewhat perishable. This hoarding will correspond to advanced production, which will lead to larger payrolls and input purchases. Deflation is the opposite, it discourages payroll and input purchases, therefor further retarding economic growth. Therefor, as a preference, almost all economists would state that low inflation is preferable to low deflation. Also, if inflation is low, it can be offset by investing wealth in interest bearing instruments, therefor not eroding wealth. Deflation, unless you have all wealth in cash, cannot be countered this way. There would be a point where moderate inflation, (or severe), would be worst than low deflation, I am not exactly sure how it would be calculated, but it would be there.</p><p>&nbsp;</p><p>Please feel free to disagree, just stating a standard opinion, and the one I agree with. Given a preference, (and same degree), I would always choose inflation. Now severe inflation is of course horrible to everyone, and Japans deflation was very mild, so a comparison of Japans deflation to severe inflation anywhere will show Japan to be the winner. Also the fact that Japan is an export driven economy mutes the effects of deflation, since if local consumers do not buy, Japanese companies can always sell overseas. This would not be as effective in the US since we are not an export driven economy, but a consumption driven one.</p><p>&nbsp;</p><p>Many economists actually claim low inflation is actually the most preferable situation of all. I completely understand where they are coming from, but I still lean towards an ideal of flat pricing, (ie no inflation or deflation at all). That is almost impossible, though. </p><p>&nbsp;</p><p>Now, if you want to get into an argument that the government systematically underreports inflation, I would completely agree and help you out. <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" /> I am CFO of a company and we are actually a part of the CPI, and how it is calculated is pretty silly.[/QUOTE]</p><p><br /></p>

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