With the different market post’s I got to thinking about deflation, and was wondering about your guy’s thoughts on it if it was managed the way inflation is, let’s say the FED tries to maintain the rate of deflation at 2 percent to prevent a major crash, do you think it can be done? With the correct regulation I think it’s possible to do, do I believe times get tough yes I do, I’m beginning to wonder if economically it might be the best thing once people gets passed the fear thought deflation means the world is ending.

The FED won't allow deflation

I’m wondering more on a theoretical bases if you think it’ll work.

That would make your payments on mortgages cost more each year instead of less. the number stays the same but the percentage of your income comes down each year.......jk

I am far from the most economically literate on this site, but my personal opinion is I do not see how this could work in the long run. Also baffled how you think deflation could prevent a crash.... it would be more likely to cause one, imo.

Let's try to break it apart a little. First, how many people do you know with no debt? No mortgage, no car payment, no student loans, no credit card balances? Now, how many corporations do you suppose have no debt?

So, how would the Fed bring about and maintain deflation? They would need to do one (or more likely a combination) of the following: Hike rates bigly, reduce the money supply a lot, or reduce the credit it issues to borrowers.

So what happens then? Companies are bringing in less revenue, but their debt burdens do not decrease. This will lead to layoffs and wage decreases. Average workers will be bringing in less money, and while products will be cheaper, their debt payments will not. Unemployment will rise. The GDP will decrease.

The economy would stagnate. Why would a corporation proceed with a planned expansion when they know it will be 2% cheaper to do so next year, or 10% cheaper if they put it off 5 years. The same on the consumer side. Why buy a house or a new truck now, if it would be cheaper to do so in a couple years? And even if they did want to expand/buy now, would they be able to? Credit would be restricted, and therefore more difficult to obtain, and more expensive when you can obtain it. Add to that any previously existing debt, which has also became more expensive.

Then there is trade. Imports would increase as a stronger dollar would allow consumers to spend more on cheaper imports. But, since other countries' currency would be worth less against the dollar, they would try to source as much as possible from countries other than us. This would result in a huge hit to US manufacturing, further compounding the issue, leading to yet more layoffs and further wage cuts.

Inflation is caused, in part, by strong growth. Deflation is caused, in part, by strong retraction. The dilemma the Fed faces with their dual mandate of managing inflation and unemployment, is if they raise rates / reduce the money supply / contract credit too much, it will impede growth and bring about higher unemployment which could lead to a recession. And that is just when they are trying to rein in inflation... to bring about deflation they would have to be much more severe, and imo, it would likely result in recession.

Now, theoretically, could your idea ever work? MAYBE. But not the way the country is currently structured. Both companies and individuals are wayyyy too leveraged for it to be plausible. If both groups had more free cash and less debt... it would be a different discussion all together. But that is not the reality of this country and has not really ever been.

Now, all that said....... I don't think we are anywhere near recession now. And I don't even think a mild recession would necessarily be all bad. Company valuations, IMO, are unsustainable at current levels, and I think tightening the money supply and/or modestly raising rates is the path the Fed should be taking going forward.

Anyways.... that's my 2 cents worth, lol.

U.S would never be able to afford it's debt, I don't see how this could work.

Well credit is a rather new idea. And the fed was not even a thing until 1913 and well tariffs funded government until then so…..and the first progressive crap weasel president Woodrow Wilson was in charge coincidence probably not. But I do think it’s stupid that instant information contributes to instant swings in the Dow… but I am just an agronomist field scout…

First I meant the FED manage the deflation rate to prevent a crash like they do with inflation to prevent high inflation, first I would think money reduction would be the biggest factor also interest rate would be used to maintain the rate, as far as debt that’s the biggest challenge but not an impossible challenge that’s one reason for FED control is to watch and to keep things moving, with borrowing money right now it’s very tough in this part of the country, with this it would face companies and people to confront debt they have, that’s the reason I think economically I think it makes sense, but this is why it’s theoretical thinking. These are some of thoughts I have when drinking and fun to talk about.

This is where you lose me. In order to manage the "deflation" rate to prevent a crash...... assuming deflation is already occurring and you're wanting to the Fed to manage it to stop it from deflating more??? The Fed would need to do the opposite of what you're proposing. Which is what they've historically done in the few deflationary periods we've experienced. They would need to slash rates, loosen the money supply, and expand credit.

My first reply was in response to taking it as you were wanting the Fed to go from where we are now all the way down to 2% inflation and then hold it there.

But if you're talking about deflation that is already occurring (which has not happened on any meaningful scale since the global financial crisis) and the Fed trying to prevent it from getting worse....then loosening monetary policy is what would need to be done.... not tightening it.

Deflation it can damage the economy. It is when we go in the negative direction of 0%. Yes Feds want to keep inflation ~2%. To curve deflation they lower interest rates, adjusting reserve policies, buying assets, and guiding expectations to keep inflation near their 2% target.

Deflation is when services and goods drop in price and that is bad for the business and companies. When the market crashed over a century ago Feds didn't interact to help keep things on an even keel. These days of economy they intervein which really helps for irreversible events.

A bear market is when the stock market looses 20% a recession is when down minus for two quarters in a row. I disagree at this time to raise rates and think different about that then you. Increasing rates doesn't create higher inflation. It can though. Higher rates changes our economy in many ways and not all bad though.

I had to look it up but inflation is 2.4% as of today. CPI update is Scheduled for April 10, 2026 it will us our inflation number for March. So, I thought is was just under 3% but 2.4% is very ideal inflation for a balance of our economy and where the Feds like it to be.

Yote,,, You’ld be doing yourself a huge favor by reading up on Austrian economics,,, Mises, Hayek, Rothbard, s
Saifadean ammous and defenders of deflation like Philipp Bagus.

You’ve totally fallen into the Keynesian trap,,,

One of the notable deflation events of the USA was after the Great Depression. No one had anything couldn't afford to buy anything and product when sold were low price. Then that is a problem those business can't make it and close. That is bad ingredient for a vigor economy. You never want to have inflation go to 0 and even worse negative percentage.

What did you look up to get that 2.4% rate snowy? The February core PCE was 3.0% with headline PCE @ 2.8%....... oh never mind you were looking at CPI. Heck, you even said that and here I spent 10 minutes looking it up LOL. The PCE is the Fed's preferred measure.

How do you feel that increasing rates can create higher inflation?

I have read a lot of that. I am referring to how the Fed operates today. I know it is not ideal. I also know almost no one has the stomach for what would need to happen......

Just googled inflation as of today. Chatgtp has the same answer. Yep CPI.

You don’t think people could stomach things getting cheaper? Less government? Actually getting paid a decent interest rate on savings?

I could go on and on and on

New CPI number tomorrow. I think it will go up.

Do you think the government is going to reduce spending? Do you think the millions on welfare and medicaid, the farmers and businesses getting subsidies........would be okay with losing those handouts? Do you think we will go back to a gold standard or some other form of a full reserve banking system?

Believe me, I am a fan of Austrian economics, but I think anyone who thinks we will see anything like that in our lifetimes is just dreaming......... Unless of course an entire collapse of the economy occurs, in which case it could be possible.

Today, as we speak,,,

What ever you think of the what’s happening in Iran

Iran isn’t asking for payment in USD or yuan or gold

It’s happening right now,,,

"Payment must be in Chinese yuan (via Kunlun Bank / CIPS) or digital assets."

Just a way to avoid the dollar or euro.