How come we experience so much more inflation than deflation? in other words, why does our buying power decrease far more often than it increases?
(lemmy.dbzer0.com)
A few good comments and quite a few... not so good. A lot of explanations that focus on 2nd order, downstream effects and the machinations of economists and politicians. Price is one of myriad ways to measure the past & current state of the economy and to make guesses about its future.
"Inflation" is what we call it when it costs $1.00 to buy a dozen eggs last year and $1.10 to buy a dozen of the same eggs this year. "Deflation"is what we call it if the price goes down to $0.90 this year. Just to set some terminology.
No one person or group or policy or activity causes inflation or deflation. It's just a measure of buying power.
But there is one key difference between inflation and deflation: the latter has a limit. Prices can go up forever, but they can only go down to $0.
So when all the people are trying to craft policies that influence the economy, they don't want the economy to go in the direction of the brick wall of $0 prices.
It's probably the case that inflation is the only thing that can happen and have a functioning economy over the long term. If that's the case, then keeping it low is the best approach, which is why the American economic establishment has a target of 2% inflation.