or be charged recklessly higher prices by capitalists because they just don’t have the extra cash to pay higher prices
This must be the answer to the question I was asking another commenter. They have to lower prices because people won’t have the cash. I honestly thought people didn’t already have the cash though.
They have to lower prices because people won’t have the cash.
The Fed doesn’t want deflation either, i.e. for prices to decrease rather than increase. Deflation could also set off a bad spiral: why by a toaster today for $30, when you’re confident it will be $25 in a week, or $20 in another week? When people generally expect prices to go down, they refrain from buying things, which forces sellers to offer even lower prices, etc.
So the Fed aims for 2% inflation, where prices will increase each year but only relatively slowly.
This must be the answer to the question I was asking another commenter. They have to lower prices because people won’t have the cash. I honestly thought people didn’t already have the cash though.
The Fed doesn’t want deflation either, i.e. for prices to decrease rather than increase. Deflation could also set off a bad spiral: why by a toaster today for $30, when you’re confident it will be $25 in a week, or $20 in another week? When people generally expect prices to go down, they refrain from buying things, which forces sellers to offer even lower prices, etc.
So the Fed aims for 2% inflation, where prices will increase each year but only relatively slowly.