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That's not the reason for why their inflation is so low. Switzerland has backed 95% of the Swiss Franc with Gold reserves. When the Swiss Franc inflates they just trade the Gold for their own currency and buy it off of the global markets. The result is a decreased supply of Swiss Francs in foreign markets. Scarce supply means an increase in value therefore counteracting inflation.

I believe the ECB (and most other countries) have backed their currency by less than 10% which makes it much harder to counter steer inflation.

Someone who freely admits they are wrong! Online?! I never thought I'd live to see the day. Thank you for the civil discourse. :-D

This isn't the Victorian era. We have stock markets and centralized banks all over the world.

Low positive inflation incentives people to invest their excess cash in business, which promotes growth. Deflation greatly increases the risk of loss to such investments and means that money you stash under your bed will be worth more in a year than it is now, incentiving not spending or investing your excess cash, retarding the economy.

There are many contributing factors to economic growth, but one of the baselines we have to stabilize it in a predictable manner is inflation. By maintaining a low positive inflation, we maintain stable growth.

This is a widely accepted view from financial professionals and is why the fed manipulates interest rates to steer inflation.

This is true for things like food and energy. But not for durable goods, luxury items, or things like houses and cars.

Brazil thought inflation was so nice they had it twice!

Well, what you are saying is absolutely correct.

To try to go deeper into the matter (only speculations). A great part of Norwegians own their own house/apartment and most of their loans have a “free flowing interest”, so when the Norwegian bank puts up the interest it quickly affects the private economy. Combine this with the extreme rise in the price of electricity (10-12 times up) and the long “tradition” of using electricity for heating to a greater extent than other countries. These two factors contribute to a quick and greatly weakened buying power in the Norwegian population.

Are my speculation onto something plausible?

> Why would anyone buy anything if they think they can get it cheaper tomorrow.

Because they are consumers, not speculators.

If the price goes down, anything looks like a bargain. You see many ads saying "Now 10% off!", lower prices are always a great incentive for buying stuff. An economy with a steady deflation would have a market with continuous discounted prices.

What most people, including many economists, don't understand is that deflation is a result of economic depression. Sellers offer lower prices because they are stuck with a warehouse full of unsold items. There is a correlation between deflation and recession, but deflation is not the cause, it's an effect of recession.

Neither did Sweden but good job on your first ever attempt at geopolitical analysis lil guy!

That’s exactly what I’m saying. Necessities and basic staples aside. Why do people rush to buy things if they think the price is going up? Why would anyone buy anything if they think they can get it cheaper tomorrow.

I’m sorry but you clearly don’t understand what causes inflation. All things being equal, putting more money into an economy from oil and gas sales would cause more inflation, not less.

Why is slight deflation so green, mainstream capitalist economics says it's worse than (normal) inflation.

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Why not zero?

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> If you don’t have some inflation there’s no incentive to spend.

You're confusing speculation with spending. The logic consumers use is the opposite of the logic speculators use.

Consumers don't buy something expecting the price to rise. Lower prices mean something we wanted to buy but couldn't afford is now within range. Look at all electronic devices. Are you saying nobody will buy a smart phone because prices will be lower next year?

You can also add gratuitous 3-D columns that make it impossible to compare items.

I don't necessarily agree with (1). When all values are similar it is difficult to perceive anything with a 0 based Y axis. There's no point in having a plot if you can't visually see the data. A non-zero based axis is better as long as it is clearly labeled.

Points 2 and 3 are good, though.

France actually imported gas-generated electricity from Germany, as they could not sort out their nuclear power plants.

https://www.ceicdata.com/en/germany/electricity-imports-and-exports/electricity-balance-france

Zero inflation is neutral (not bad or good) but also hard to walk that line. Deflation (which is bad) is almost inevitable as production becomes more efficient. If you don’t have some inflation there’s no incentive to spend. That incentive is necessary for a consumer driven economy.

Yes, it’s a trade off. That’s what I was thinking, too. I just wish inflation would really be in the 10% range.

Look at Denmark, Estonia and France and then reassess...

Denmark is its own currency but pegged to the Euro.

> Target inflation should be 1-2% for a consumer economy.

That's a myth. The industrialized countries had zero inflation in the Victorian era, which was also a period of great economic growth.

A lot of inflation is being caused by energy costs, which impacts all areas (from direct costs to end users to any services/production etc).

France is something like 80% nuclear, and is (now) fully state owned, and has capped the price of electricity within France, since their costs of production haven't increased. They are forgoing excessive profits at the expense of the French people (but that doesn't mean making losses necessarily), as they are charging more in line with historic levels rather than the general electricity market which is being driven by high gas (as in, natural gas) prices across Europe.

So they have minimal energy inflation which means reduced inflation in all other areas.

https://www.reuters.com/business/energy/french-power-price-increase-will-remain-capped-4-2022-minister-2022-01-13/