Quote: (01-21-2012 03:58 PM)Gmac Wrote:
Rapid deflation wouldn't be a bad thing.
Deflation contributes to economic decline. If prices begin falling people will withhold many of their purchases for a later time when the product can be had for cheaper. Consumption spending makes up the lionshare of a countries GDP figures, a slowdown there has a big impact. A perfect example of this is Japan. Their central bank has been keeping cash rates abysmally low for a very long time now to encourage spending to reverse their deflation and pick up the economy.