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Why is in flation preferable to deflation? I appreciate this is largely due to the fact that deflation causes a large decrease in demand as people continually wait for prices to decrease, but if anyone has finer points I would be grateful.

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  • $\begingroup$ I think the best duplicate match for this is economics.stackexchange.com/q/5861/44 $\endgroup$ – 410 gone Feb 6 '17 at 7:12
  • $\begingroup$ @EnergyNumbers My question was about no inflation vs inflation, not inflation vs deflation. You are right that its answers are better and are also applicable here. $\endgroup$ – Giskard Feb 6 '17 at 9:09
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I wouldn't necessarily agree that inflation is universally preferable to deflation. Each has positive and negative consequences. Inflation hurts savers, deflation hurts current consumers. A little inflation (let's say, 2% per year) is useful -- if nothing else, it helps deal with wage stickiness. Deflation, on the other hand, would be a godsend for a country like Venezuela where prices have been growing incessantly.

This is all to say that there isn't a single rule for inflation vs deflation. The broader economic context is critical.

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