[jimjamuser]

Originally Posted by CoachKandSportsguy

3 percent a year and inflation right now is 1.6%, and social security increase for next year is 1.3%, so you have a small loss of purchasing power at a restaurant. However, a healthy economy has at minimum a 2% inflation rate, or higher, as stated by the goals of the federal reserve.

What is not measured very well, is the economics of price stability. If prices are to remain flat, and corporations want to grow income, there are only two answers, more customers, or cutting costs. Cutting costs involve eliminating jobs, and substitution of cheaper ingredients. . both of those do not have unlimited opportunities to growth.

So, in the end, from behavioral economics, is to have inflation run between 2 and 3% with salaries increase about the same, so that citizens see a wage increase, they feel good, and they can still afford the same items. . . not bad feelings. . . and companies can grow revenue a small amount, still good.

If you want more, you have to work harder or smarter, but inflation and price increases at the current level are not a significant business killer, as some wildly generalized predictions have been posted.

finance guy

Absolutely correct.as to the situation TODAY using standard economic theory. Interest rates are low and the Fed is under strong pressure to keep it that way. That could change with changes in Washington. Also, CV (if unresolved in 2021) will / (or could) cause a DISTORTION in standard economic theory. WE could have negative interest rates or rampant inflation in 2021. Many Historians believe that in the US and the world there will be normal History before CV and strange, distorted History after CV. It could be that big of a factor. China could emerge the dominant economic country.