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Message:: [QUOTE="Cloudsweeper99, post: 948432, member: 3011"]In my opinion, the weakness in the "standard opinion" is that it concentrates on flows and not on the balance sheet.  It is true that low inflation forces people to spend, and if your measure of wealth is nominal GDP, things look good.  But low inflation also seriously erodes purchasing power over time for people trying to save and invest.  I think you overstate the ease of earning an after tax rate of return that exceeds the inflation rate.  A mild deflation hurts the nominal GDP that most economists focus on, but makes it easier for people to save and invest for the future since they can come out ahead by doing nothing, while beating inflation involves substantial risk-taking.  And mild deflation doesn't necessarily hurt employment.  Japan, which has mild deflation, has less unemployment that the US which has mild inflation.  So I think the "standard opinion" works better in theory than it does in the real world.[/QUOTE]