No. of Recommendations: 2
And somehow, we have to keep prices level or lower - ideas?
In traditional macroeconomic thinking, prices going lower is an economic disaster. Prices here and there going lower is fine. (Think gasoline as an example here.)
But when prices of everything start falling, economic activity slows down dramatically. People stop spending because everything will be cheaper next month. Obviously, not everything will fit this. But certainly big ticket items - cars, vacations, home improvements. Food and similar necessities will still be purchased. That slows the economy and can put it into a death spiral of falling prices. We're talking Great Depression levels of problems.
So no, prices overall are not going lower. Even trying to keep prices level is risky, because if you ever slip and prices start falling, it can be falling off a cliff.
That's why most central bankers target an inflation rate of about 2%. The slowly rising prices give people an incentive to buy sooner rather than later, which keeps the economy moving along. And if inflation slips lower than that, there is a bit of time to push prices higher and stay out of the negative inflation doom loop.
I'm fairly sure Trump will tank the economy with his tariffs. I doubt they'll be as bad as many fear, but as long as he imposes enough, inflation will spike up and people will get really unhappy with him very quickly. In the mean time, the American oligarchy will be drooling over their new profits.
