ShmoopTube

Where Monty Python meets your 10th grade teacher.

Search Thousands of Shmoop Videos

Finance: What is Disinflation? 4 Views


Share It!


Description:

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.

Language:
English Language

Transcript

00:00

finance a la shmoop what is disinflation disinflation often confused with dat

00:09

inflation refers to the decline in inflation rates over time in 1973

00:15

America was fully juiced with Warbucks from Vietnam inflation hovered around [soldiers firing weapons]

00:20

the mid going on high single digits and then higher from there like 7% or more

00:25

depending on where you look him and Jimmy Carter stepped in on this guy and [Carter walks into office]

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

Up Next

GED Social Studies 1.1 Civics and Government
39790 Views

GED Social Studies 1.1 Civics and Government

Related Videos

Fake News
11936 Views

How do you tell fake news from real news?

Finance: What is Bankruptcy?
260 Views

What is bankruptcy? Deadbeats who can't pay their bills declare bankruptcy. Either they borrowed too much money, or the business fell apart. They t...

Finance: What is a Dividend?
1774 Views

What's a dividend? At will, the board of directors can pay a dividend on common stock. Usually, that payout is some percentage less than 100 of ear...

Finance: How Are Risks and Rewards Related?
589 Views

How are risk and reward related? Take more risk, expect more reward. A lottery ticket might be worth a billion dollars, but if the odds are one in...