Part 5/9:

The interplay of inflation and deflation often hinges on the actions of central banks. The cycle typically begins with central banks keeping interest rates low, which leads to an increase in borrowing and spending. However, when inflation begins to rear its head, a sudden change in policy—slamming the brakes on the economy—can lead to a financial crisis. This pattern complicates the economic landscape as widespread bankruptcies occur, leading to the unhealthy deflation previously described.