Feared economic dark cloud: Deflation
November 5th, 2008
But the declining price spiral tends to feed on itself, and over a few months the robust, healthy economy of old now has pneumonia. Worse, nobody seems to know how to fix it. Now what we have is deflation, and that economic condition is deadly. In my estimate, that’s what we shall soon experience in America, and it won’t be any fun at all. Let us hope that people smarter than me are working on this. Deflation is best remedied in advance, but while that’s true, it’s easier to control inflation than deflation. Deflation leads to despair, economic ruin, bread lines, and depression, aptly named psychologically and economically.
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