Why can’t prices just stay the same?

If high inflation hurts just about everyone, why can’t we have no inflation?

This video is presented by DCU. DCU doesn’t have a say in our editorial decisions, but they make videos like this possible.

Over the past few years, most of the world has experienced some pretty intense inflation, with prices rising as much as 10 percent in a single year. In 2024, even though inflation rates have fallen to more manageable levels, prices are still way up and are very unlikely to come down. Which, understandably, continues to be a source of major stress for people all over the world. So why can’t prices just stay the same?

As a consumer, steady prices and zero inflation seems like the ideal: You want your purchasing power to stay the same and for your dollar today to buy you exactly the same amount as your dollar tomorrow. But even in times of global economic health and stability, governments and their central banks actively avoid letting inflation get too low. That’s because 0 percent inflation might actually end up doing more harm than good.

In this video, we take a look at the reasons why.

Sources and further reading:

[person]

Inflation: 8%.
Pay raise: 2.6%.
Boss: "Congratulations on your pay raise!"

[languagespotlight]

Why does economics always feel like an big international game of tightrope walking

[tonysilke]

More and more people might face a tough time in retirement. Low-paying jobs, inflation, and high rents make it hard to save. Now, middle-class Americans find it tough to own a home too, leaving them without a place to retire.

[A_francis]

The current economy is unnecessarily tougher for boomers/senior citizens, I’m used to just buying and holding assets which doesn’t seem applicable to the current rollercoaster market plus inflation is catching up with my portfolio. I’m really worried about survival after retirement.

[Linkous]

"Companies make more money, which means more people have jobs." Are you sure about that?

[liamtheurchin]

Inflation allows companies to cut your wages without cutting your wages.

[TETSU]

5:00 "consumers stop making purchases in hope things will be cheaper"? Am I the only one who buys things because I need them, not because they are cheap or expensive?

[gablit]

the consumer mentality in the cycles is so wrong.
you don't buy less when price is lowering. you buy less when you have less money.

[KidFury]

You completely forgot about "parachute" pricing. This is where prices go up, the companies like the additional revenue and purposely slow the decline back to an acceptable amount. 🤬

[SmoggySandwich]

Except these days companies take all the profit of inflation for themselves and still lay off people.

[ryanwilliams]

In light of the ongoing global economic crisis, it is crucial for everyone to prioritize investing in diverse sources of income that are not reliant on the government. This includes exploring opportunities in stocks, gold, silver, and digital currencies. Despite the challenging economic situation, it remains a favorable time to consider these investments.

[DonaldMark-nese]

The only American who won't acknowledge this Administration's failed economic policies is Joe Biden. "Shrink-flation' is the least of our worries compared to rising rents and stagnant wages, but it is an undeniable indicator of how bad our inflation has gotten. I have $100k that i like to invest in a non-retirement account, any advice on that?

[woodykusaki]

So when they say.. "inflation is a good thing"..
You mean.. "it's a good thing for companies. We don't care about the average people"

[MRFLOPPYmr]

We are getting this concept told for decades now. But does it really make sense?

Do you buy a new laundry machine/smartphone/coffee because you fear that it will be more expensive next year?

Would you visit restaurants less frequently, when their prices get cheaper, expecting that prices will fall even more next year???

[Kaustavpatell]

I foresee a recession lasting 2-3 years, and if inflation continues to surge, the Federal Reserve will likely raise interest rates soon. Inflation is causing various issues worldwide, such as food shortages, scarcities of diesel and heating fuel, and significant spikes in housing prices, leading to a potential financial market crash. This global downturn could have long-lasting repercussions. Given the current inflation rate of approximately 9%, my main worry is how to optimize my savings and retirement fund, which has remained stagnant at around $300, 000, yielding almost no gains for quite some time.

[Higuannn]

I love this and DCA everyday on what I'm overweight in. I used to do the auto deposit however I stopped when I couldn't guarantee at what time my deposit would go thru. I like to control the time I deposit and buy daily. Love your video. New subscriber here.

[Ore]

Companies cut labor no matter what because they are only concerned with increasing shareholder profit.

[adarshkumar]

That was a weird ad spot. Came out of nowhere

[mariuszarszylo]

There needs to be an asterisk next to your title - "Why can't prices just stay the same? *in theory"

[blissds-gimb]

"Oh sure, let's just keep prices the same forever. Because who needs economic growth, right? I've got $145k saved up in my emergency fund, ready to dive into investing, but every time I think about inflation and market fluctuations, I just want to keep my money under the mattress. Anyone got a time machine to the 90s when prices were 'normal'? 😂"