The fear of deflation taking hold is a much bigger problem that reasonable inflation; deflation decreases the price of goods and services and could also mean higher unemployment. 23 News financial expert Brad Gummow says deflation's ripple effect is a bigger threat than inflation or the general rise of price levels. Gummow says when banks stop lending, businesses stop expanding, we stop spending, and all of that pushes prices lower halting efforts to boost the economy.
Gummow says stagflation, the combination of slow growth and inflation, could be part of the new normal when our economy recovers.
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