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Re:Fed raises rates by another 75 bps to fight inflation by WalterBright on Wednesday September 21, 2022 @08:38PM (#32933467)
Why is there no deflation from mass psychology?

BTW, you cannot imagine yourself into having more money.

Re:Fed raises rates by another 75 bps to fight inflation by robocat on Thursday September 22, 2022 @03:24PM (#32943496)
> Why is there no deflation from mass psychology?

There is: that is the ECON101 feedback model of deflation causing money under the mattress reducing money supply causing deflation. That doesn’t occur because modern money systems don’t have a fixed supply of printed money; also governments actively prevent deflation so it isn’t seen.

“Opposite effects occur when the supply of money falls or when its rate of growth declines. Economic activity declines and either disinflation (reduced inflation) or deflation (falling prices) results”.

Rate of growth can decline due to consumer sentiment (psychology).

> BTW, you cannot imagine yourself into having more money.

Strawman.

Consumer sentiment (psychology) can become more positive, people borrow more (increase mortgages or buy a “better” house) and spend more (increasing the money supply).