Difference between revisions of "Deflation"
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'''Deflation''' is when the value of paper money (e.g., a dollar bill) increases over time. The cost of goods "deflate" in their prices, so that what cost $1 last year may cost only 80 cents this year. | '''Deflation''' is when the value of paper money (e.g., a dollar bill) increases over time. The cost of goods "deflate" in their prices, so that what cost $1 last year may cost only 80 cents this year. | ||
| − | '''Deflation''' is the opposite of [[inflation]]. | + | '''Deflation''' is the opposite of [[inflation]], but liberals consider deflation to be worse. The [[Great Depression]], for example, was characterized by deflation. |
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| + | But some disagree with the liberal view of this. As one observer points out, "[t]he period of the greatest growth in the U.S. during the nineteenth century, from 1820 to 1850 and from 1865 to 1900, was associated with significant deflation."<ref>http://mises.org/library/what%E2%80%99s-so-scary-about-deflation</ref> | ||
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| + | == References == | ||
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| + | <references/> | ||
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[[Category:Economics]] | [[Category:Economics]] | ||
Revision as of 22:11, January 5, 2015
Deflation is when the value of paper money (e.g., a dollar bill) increases over time. The cost of goods "deflate" in their prices, so that what cost $1 last year may cost only 80 cents this year.
Deflation is the opposite of inflation, but liberals consider deflation to be worse. The Great Depression, for example, was characterized by deflation.
But some disagree with the liberal view of this. As one observer points out, "[t]he period of the greatest growth in the U.S. during the nineteenth century, from 1820 to 1850 and from 1865 to 1900, was associated with significant deflation."[1]