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What is Disinflation? Disinflation is a term used for an interim slowdown of inflation rate. For example, a reduction of inflation growth from 3.5%...
Finance: What is Disinflation? 5 Views
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What is Disinflation? Disinflation is a term used for an interim slowdown of inflation rate. For example, a reduction of inflation growth from 3.5% to 3.1% would be a slowdown of inflation, although prices would still be rising. This would be characteristic of disinflation.
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Transcript
- 00:00
finance a la shmoop what is disinflation disinflation often confused with dat
- 00:09
inflation refers to the decline in inflation rates over time in 1973
- 00:15
America was fully juiced with Warbucks from Vietnam inflation hovered around [soldiers firing weapons]
- 00:20
the mid going on high single digits and then higher from there like 7% or more
- 00:25
depending on where you look him and Jimmy Carter stepped in on this guy and [Carter walks into office]
Full Transcript
- 00:28
raised the federal rates the Fed rates their massively stamping out the wild
- 00:34
bull economy and putting the brakes on inflation but it didn't happen until
- 00:37
after Carter was actually out of office and Reagan took over inflation [Reagan replaces Carter in office]
- 00:42
eventually had rocketed all the way up to about 14 ish percent on an annualized
- 00:47
basis looking at the monthlies in the 1980-81 period right here
- 00:51
well the crux of dis inflation is that inflation is still positive it's just
- 00:56
becoming well less positive and or like you know how you feel not long after you
- 01:01
say I do and the honeymoon is over and you have to take out the garbage so
- 01:04
under Carter the US inflation rates were attacked in a variety of ways the [Carter in a boxing ring]
- 01:08
biggest of which was to make the cost of renting capital very expensive which
- 01:12
cooled the economy but it took a long time like note how slowly inflation
- 01:17
rates came down and well really it was decades before things fully stabilized
- 01:21
you can see how things slowly disinflation the raging levels that
- 01:25
peaked at post-vietnam era 1314 percent then slid all the way down to a 1 to 3
- 01:31
percent way down there where it's hovered for a
- 01:34
while so that's disinflation still inflation but just less of it deflation [Disinflation deflating]
- 01:40
is when inflation turns negative like prices are actually declining and yes
- 01:45
we've had periods of deflation before albeit very short ones like in the post
- 01:49
mortgage crisis Mallove's in 2009 right here yes yes it's rare but it happens
- 01:54
got it okay class dismissed
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