Finance: What is Disinflation?

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

00:28

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