You always read in the newspapers that the Federal Reserve will raise interest rates to stop inflation. But nobody ever really explained why Inflation is bad to the layman. Sure, they say inflation means same amount of money can buy less things and that is bad. But that is a mantra which doesn't really explain, why it seems to me the chief purpose of the Fed is to fight inflation, and not fight deflation. All periods of economic growth will have a degree of inflation. As we have seen from Japan's 14 year experience from 2000 to only recently, deflation can be bad too, with no jobs and low GDP growth. So explain to me why inflation is bad, in detail. I want to put the best answers on my blog at http://randomthoughtsofanagingbabyboomer.blogspot.com
Thank you
2006-09-22
08:34:42
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7 answers
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asked by
tiankhean
1
in
Other - Business & Finance