In most economies of the world dominated by inflationary pressures.Many economists are inclined to think that keeping the economy at the level of price increase by 2-3% is optimal for its development.And only a few countries dominated by deflation.This applies to Japan, Bahrain and Belize, where a similar situation has been observed for several years.
course, inflation itself is considered to be a negative phenomenon, especially when its rate exceeds the specified threshold.Money supply is impaired, the purchasing power of the population while maintaining the consumption falls, that encourages people to seek higher returns.Deflation - is the reverse process, the purchasing power of money is increasing, prices are falling, that if the current level of consumption gives the growth of savings.From the standpoint of the layman, this situation is favorable.
But from the point of view of the state harder: prices are falling, and people continue to buy as much as before, it means manufacturers are falling incomes and they go bankrupt.If this does not happen immediately, then sooner or later the market is still saturated.The released funds are the people in the banks and make contributions.Banks do not issue loans unnecessary.People stop in time not only to strive for higher wages, but also stop working at all, because they can live on interest from investments.Over time, this situation turns into stagnation, since there is practically no production, the financial system is also falling apart, the economy is not growing.It is believed that these effects threaten deflation.
Economy - a complex system with multiple mechanisms of self-regulation that had not been studied until the end.Although most economists tend to believe that deflation destructive, called this phenomenon can not be unambiguously negative.It is believed that in the choice between it and the latest inflation becomes a lesser evil, while the balance is not possible.
True, some experts still think that if the money supply is not controlled by the state and economic agents, then disappear as inflation and deflation.It is possible, though and unwieldy.Check this theory is difficult because it is practically impossible to create a suitable platform for such an experiment.
reasons, most experts see deflation in the high growth rates of production capacities, as well as the imbalance in the banking system in the direction of reducing the volume of lending.In general, these processes are typically still balanced inflation.Some apologists deflationary economic model considers that its construction is possible in practice, and any clear transitional difficulties are surmountable.However, such a scheme is realizable only, perhaps, under the communist system.And then it will be appropriate to call this a market economy - a serious matter.
Meanwhile, the dominant economic model with controlled moderate inflation, and a new generation of economists brought up with the idea that deflation - a negative process, which should be avoided by all means.
