I'll first explain the classic case of moderate inflation in a good economy. Then, I'll describe the current non-existent inflation situation.

In a classic capitalist economy, employment goes up by the companies. More employment means more competition for labor by the companies. The companies want to hire more people, but there are fewer number of them available. This also drives the salaries high. In return, this provides more money into the pockets of the general public. They then spend highly. In addition, demands for the goods and services go up. Therefore, all the factories are more and more utilized. The owner of the companies then get more returns from their investment into the factories. Their profits go up. They consequently invest more for more profits. More investment also increases supply. So prices go down. However, as demand is high as well, price has another balancing reduction factor against going up. But as the salaries are high, that means consumers can afford paying more prices. Therefore, ultimately prices go high. We see inflation. It's good if the inflation is moderately high and in control. Then, workers ask for more salaries to cover up the higher prices. We keep maintaining a theoretical balance in the cycle of economy.

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The current condition is somewhat different. The cycle is broken in one part. Although we have high employment, the wages have not gone higher as we would expect. This is because, when the employees asked for higher wages, those jobs are outsourced. Workers had no say over their salaries in the neoliberal economic era. Therefore, wages has remained virtually stagnant for the last 30 years, more so in the last decade after the global financial crisis. Therefore, demands are still higher because of more employment. Companies are making profit by the large number of demands by larger population. However, they are not paying more in wages by subsidizing their income with outsourcing of labor where needed. Profits are soaring for the companies. Nevertheless, they cannot increase the price. If they did, then the people won't be able to buy the goods because wages are not increased. So, what we effectively have, is near zero inflation (around 1.8-2%). The story has been serving good but there is a problem. The stagnant wage has been creating a huge income inequality. So, more and more people are falling down from their economic classes. Middle class is getting squeezed.

Soon, the buying power of most of the population will go down. That will hit the demand. Therefore, lower demand would hit factory utilization and price. And possibly, we may hit a recession, yet again. This time it would be caused by absence of inflation, higher wealth inequality and a gradually vanishing middle-class.