US Economy Needs Deflation to Combat Inflation Post-Pandemic
Experts suggest that only way for US economy to combat high levels of post-pandemic inflation is through inducing a period of deflation via Federal Reserve measures such as raising interest rates and slowing down money supply growth; although this could cause short term economic pain, it could lead to long term benefits such as increased investment opportunities for businesses and improved purchasing power for consumers who have saved up money during periods of deflationary pressure
Dec. 24, 2022 3:01AM
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An image depicting a graph showing rising prices (inflation) followed by falling prices (deflation).
The United States economy is in a precarious position. After the pandemic, inflation has been running 10% above prior trends, meaning that nearly six years of inflation have occurred within the last 18 months. To make progress on this issue, experts are suggesting that a recession must be induced by the Federal Reserve. This suggestion is not one that should be taken lightly. A recession would undoubtedly bring hardship and economic suffering to many people across the country. However, it could also provide an opportunity for growth and stability in the long run if managed properly. The Federal Reserve has already begun taking steps to reduce inflationary pressures by raising interest rates and slowing down money supply growth. This will help reduce consumer spending and encourage saving, which can help counteract some of the effects of inflation post-pandemic. However, economists warn that these measures alone may not be enough to completely reverse inflationary trends. A period of deflation may be necessary in order to restore balance to the economy and prevent further damage from occurring due to high levels of inflation post-pandemic. Deflation is when prices fall over time instead of rising as they do with inflation. It can be caused by a decrease in demand or an increase in supply, both of which can occur during a recession as people become more cautious about their spending habits and businesses struggle with reduced profits due to decreased consumer demand. Although deflation can cause short-term economic pain, it can also lead to long-term benefits such as increased investment opportunities for businesses as well as improved purchasing power for consumers who have saved up money during periods of deflationary pressure. It remains unclear how exactly the Federal Reserve will go about inducing a recession or how long it will take before we start seeing any positive effects from such measures being implemented but one thing is certain: something needs to be done soon if we want our economy to remain stable post-pandemic and avoid further damage from runaway inflation rates caused by rapid economic growth over the past few years .