The Deflation Bogeyman

Deflation and Democracy

Deflation Doldrums?

Inflation or Deflation?

The Second Great Contraction

The experience of deflation is well entrenched.

Deflation in many advanced economies.

Can China Avoid Deflation?

The Great Contraction of 2008 2009

Can China Beat Deflation?

Finally, employment continues to contract rapidly.

Some countries, like Angola, are contracting.

Why Deflation is Good News for Europe

Deflation, on the other hand, increases debt, and feels like being smothered by a lead blanket.

If prices fall at a rate of 1 , could they fall at a rate of 10 ?

But, in a Great Contraction, problem number one is too much debt.

Deflation that emanates from the financial sector is lethal.

Deflation discourages optimism about the future.

Has Global Stag Deflation Arrived?

This contraction has become even more severe since then.

Fiscal contraction is contractionary, period.

Dealing with deflation is impossible within the bounds of normal market operations.

The root cause of all these developments is Europe s population shrinkage. The demographic time bomb that economic analysts have been discussing for a decade or more is now exploding.

The downturn caused the deficits, not the other way around.

Wall Street is now facing one of the worst contractions in history.

The most direct adverse impact of deflation is to increase the real value of debt.

Central banks can play an important role in a cyclical downturn.

In the Great Depression, bank collapses made the downturn far worse.

There was no persistent tendency to deflation.

Policy as a whole over the entire euro zone is too deflationary.

At the same time, it spares an already weak economy damaging fiscal contraction in the short run.

Japan provides good lessons about where the true risks are, as it has been suffering from deflation or near deflation for 14 years.

It also invested billions in a wall, whose cost is far higher than originally planned, after confiscating large portions of Palestinian territory.10

But in 2003, following five years of deflation, China s economy entered a new phase.

Historically, failure to protect against inflation or deflation has helped spur calamitous outcomes.

The current downturn, already a half decade long, will not end any time soon.

Despite this massive shrinkage, the reality on the ground is unchanged.

Abenomics goal is to escape two decades of deflation.

Employment growth continues to disappoint, and fears of deflation will not go away.

But deflation is painful and cannot realistically be pursued for political reasons.

We know that in periods of economic recession, youth are among the worst hit.

The productivity growth that was sustained through the downturn presented both an opportunity and a challenge.

But what we have seen since 2007 is an overshooting of the contraction in consumer demand and domestic investment.

Following the German economy s sharp contraction in the last quarter of 2012, the question for the country today is whether it can avoid a technical recession (defined as two consecutive quarters of economic contraction).

In the last three years, I've traveled to 45 different countries, working with schools and companies in the midst of an economic downturn.