There's no rational basis for the 2pct inflation target [1], it's entirely baseless, in some sense it's now a matter of conservatism, mere tradition from a random fad decision in the 90s.
And the point is that monetary expansion directs the energy of the economy and effectively steals savings, forcing the economic energy of people into consumerism and CEOs pockets.
Except that it seems to work.
Hitting an inflation rate of exactly 0% is practically impossible: you're going to be either a little high, or a little low. So the option is: do you want "too high" or "too low" (negative)?
In the last little while how we've all seen how painful high(er) inflation is for people. Lessons from periods of the 1930s (and others in the linked-to PDF) show how bad deflation is.
A "little" high seems to have been a pretty good compromise.
It is been their policy and their desire to get out of the situation that you describe, and not to be living in it:
* https://en.wikipedia.org/wiki/Abenomics
They want(ed) to hit higher inflation:
> Under Kuroda, the BOJ deployed a huge asset-buying programme in 2013, originally aimed at firing up inflation to a 2% target within roughly two years.
> The central bank introduced negative rates and YCC in 2016 as tepid inflation forced it to tweak its stimulus programme to a more sustainable one.
* https://www.reuters.com/markets/asia/japan-poised-end-negati...
What you're describing wasn't their goal, they have been keeping interest rates at ~0% since the late 90s to avoid deflation and to stimulate the economy (and therefore increase inflation) with limited success.
I'd still like to know according to who. Practically everyone agrees the economy is worsening for average people during many decades of nearly universal control by "mainstream" economists, advisors and bureaucrats.
Look at the chart that this story is about: when things go negative, what do you think happened to people's employment opportunities? What do you think happened to their debts (deflation makes it worse)?
Do you want to perhaps look at the economic historical record of the ~80 years before 1945:
* https://en.wikipedia.org/wiki/Panic_of_1910–1911
* https://en.wikipedia.org/wiki/Panic_of_1901
* https://en.wikipedia.org/wiki/Panic_of_1896
* https://en.wikipedia.org/wiki/Panic_of_1896
* https://en.wikipedia.org/wiki/Panic_of_1893
* https://en.wikipedia.org/wiki/Panic_of_1873
There have not been as near as many widespread economic collapses post-WW2 as there were pre-WW2. 2008 is probably the only one that came even close.
The main contributor to the working class getting a raw deal since the ~1970s is (IMHO) the idea of shareholder value (primacy):
Any common person realizes their ability to lead a dignified life is being squeezed out by monetary expansion gone amok, with those closest to the govt spigot getting the benefits and none of the costs (cantillon effect).
And it brings up a good point which no one answers satisfyingly: why shouldn't the average person just enjoy price savings produced by technology?
The 1930s were nothing special when it comes to wild swings in prices (as the article show), speculation was not new (see canal mania, railroad mania, etc)
* https://en.wikipedia.org/wiki/Canal_Mania
* https://en.wikipedia.org/wiki/Railway_Mania
What is special is the post-WW2 era (where there was no deflationary bust, especially after a major war), and the decades that followed (when there was no gold standard to handcuff monetary policy, and when Keynesian economics allowed for fiscal flexibility).
> And it brings up a good point which no one answers satisfyingly: why shouldn't the average person just enjoy price savings produced by technology?
There's a difference between deflation through innovation, and deflation through economic turmoil (e.g., mass unemployment, collapse of aggregate demand).
One of my favourite examples of 'invisible deflation' that no one notices (often while they're complaining about inflation) is a 1991 Radio Shack ad:
* https://www.huffpost.com/entry/radio-shack-ad_b_4612973
* Via: https://awealthofcommonsense.com/2021/01/inflation-truthers/
I realize that the two manias were forms of speculation, and that getting overly excited about things seems to just be a thing humans tend to do.
* https://en.wikipedia.org/wiki/Technological_Revolutions_and_...
human nature is to avoid discipline when they're comfortable and set the stage for a bubble & contraction, exactly what happens with artificially low interest rates and speculations like the manias you brought up
That said, the fact that austerity has been tried recently suggests the perverse impulse to respond to deflation with belt tightening instead of expanding credit is still with us. But all we have to do is just print money to match the deflation. The 1990s through 2019 are a great example, there was constant economic deflation because of new technology and the fed just printed credit like crazy to match said deflation and keep the inflation at 2pct.
The pie was getting bigger, so eroding the value of each slice to make it a smaller portion of the pie kept slice sizes stable while not making anyone lose pie.
They had an easy time with that. Now that the pandemic caused real eocnomic inflation due to supply shocks, dealing with excess inflation is a lot harder. The only way to keep pie slice size stable is to take away pie from someone and nobody wants be the loser, so capital and labor are in a game of chicken to see who blinks first and has to eat more of the inflation.