…and aggregate demand; second, to prevent ruinous deflation and “destructive competition” in labor markets; and third, to maintain a better balance between spending and production both by counteracting greater inequality…

…of deflation. Just as the Fed rate stayed over the natural interest rate back in the 1970’s and 1980’s, the Fed rate will now want to stay below the natural…

…2008, arguably the deflation of asset prices would not have fostered a default contagion, if at all, much beyond that of the dot-com boom…” Lifted from comments on Delong’s post…

…the pockets of the people, namely labor, namely the consumers. Aging population on fixed income. They like deflation. Small percentage of children in population. Children are actually outnumbered by pets….

…be explained by the rise in their inflation expectations between 2009 and 2011.” The logic is that we did not have as much “disinflation or deflation” as might have been…

…save rather than consume or invest is uncertain… demographic trend… psychological trend… shortage of “safe” assets… anticipation of deflation…. But whatever it is, we know that there is an extraordinary…

…more unstable as loan defaults mount. Low inflation reduces Financial Repression Low inflation, and especially deflation, will raise the current real interest rate closer to the natural real interest rate….

…rate rises naturally. Yet,, inflation meets resistance as it goes toward 0%. So the real rate stays negative and can’t rise to its natural level. Outright deflation would allow the…

…announced last week to avoid deflation (see here and here). The immediate impact of the announcement was a rise in European stock prices. But the approval of the financial sector…

…not constant. If inflation (or deflation) is high, the opportunity to adjust prices (or wages) is quite valuable. If it is exactly zero, in the models, the value can be…