Trading Ideas
What is Deflation?
Most people are familiar with the word inflation, which typically has a negative connotation. However, in economic terms, deflation is actually a worse prospect. In monetary policy, it can refer to the overall shrinkage of the money supply or the decrease in the cost of consumer goods and services. Where inflation means a rise in prices and a drop in purchasing power, deflation indicates a lack of purchasing ability altogether.
In fact, it’s a form of economic contraction. It signals a depressionary period that can perpetuate even more economic downturn by its very nature. Thankfully, the Federal Reserve can use …read more […]