This analysis neglects the concept of velocity. If there is a fixed amount of dollars but (for example) a collapse in the housing market causes velocity to plummet, then unexpected deflation will wreck more chaos on the economy than an inflation rate of 1-2%.
This analysis neglects the concept of velocity. If there is a fixed amount of dollars but (for example) a collapse in the housing market causes velocity to plummet, then unexpected deflation will wreck more chaos on the economy than an inflation rate of 1-2%.
A currency with a fixed supply is not stable.