Deflation that emanates from the financial sector is lethal.

Fiscal contraction is contractionary, period.

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

But Keynesianism involved continued fiscal expansion, with no offsetting monetary contraction.

The Deflation Bogeyman

Deflation and Democracy

Deflation Doldrums?

Inflation or Deflation?

The Second Great Contraction

The experience of deflation is well entrenched.

The prospect of a disorderly fiscal contraction needs to give way to a more rationally designed approach that avoids undermining the fragile recovery.

Indeed, just a year or two ago, expansionary fiscal contraction was all the rage, and a massive research effort went into proving its existence.

Japan s deflation and economic stagnation over the last two decades stemmed largely from a dysfunctional financial system and a lack of private demand.

Can China Avoid Deflation?

The Great Contraction of 2008 2009

Although the new tax law is generally described as a fiscal stimulus, it is more accurate to say that it avoids a large immediate fiscal contraction.

Can China Beat Deflation?

It is a customary contraction like our

Why Deflation is Good News for Europe

Deflation in many advanced economies.

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 ?

'Company.' It is a customary contraction like our

You might call it an economic downturn.

Indeed, this was the trap faced by Argentina in 1998 2001, when needed fiscal contraction exacerbated recession and eventually led to default.

Deflation discourages optimism about the future.

Has Global Stag Deflation Arrived?

This contraction has become even more severe since then.

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

Finally, employment continues to contract rapidly.

Some countries, like Angola, are contracting.

There was no persistent tendency to deflation.

The love has been very tough indeed, generating rapid economic contraction, massive unemployment (upwards of 50 among young people), and continued fiscal deterioration, owing to rising debt service costs.

It is not clear if deflation can be beaten with monetary policy excessive fiscal stimulus and deferred austerity may make the debt unsustainable and the structural reform components of Abenomics are vague.

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

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

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

Abenomics goal is to escape two decades of deflation.

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

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.

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

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

As we age, our time horizons grow shorter and our goals change.

The dilemma is that, whereas fiscal consolidation is necessary to prevent an unsustainable increase in the spread on sovereign bonds, the short run effects of raising taxes and cutting government spending tend to be contractionary.