Here's something most people get wrong about modern finance: the entire system hinges on inflation.

Why? Because debt needs it. When deflation kicks in, collateral values tank, borrowers can't cover their positions, defaults spike—you get a debt spiral nobody can escape. It's brutal.

Deflation might sound great for your purchasing power, but it demolishes the fiat debt infrastructure that underpins global financial markets. That's the real reason central banks target 2% inflation as the baseline. It's not random—it's the minimum inflation required to keep the debt machine turning.

Think of it this way: inflation erodes debt gradually; deflation detonates it. The system chose one.