The dangers of deflation: The pendulum swings to the pit

Posted: October 23, 2014 in economy
Tags: , ,

UK Only Article: 
standard article

Fly Title: 

The dangers of deflation

Rubric: 

Politicians and central bankers are not providing the world with the inflation it needs; some economies face damaging deflation instead

Location: 

WASHINGTON, DC

Main image: 

20141025_FBD001_0.jpg

IT IS a pernicious threat, all the more so because, at its onset, it seems almost benign. After two generations of fighting against inflation, why be worried if the victory looks just a bit too complete, if the ancient enemy is so cowed as to no longer strain against the chains in which it is bound? But the stable low inflation fought for in the 1980s and 1990s and inflation hazardously close to zero are not so far apart. And as inflation drops, slipping into deflation becomes ever easier. It is in that dangerous position that the world now stands.
In America, Britain and the euro zone central banks have a 2% target for inflation. In all three, it is below that target. In Italy, Spain and Greece, which have experienced …

via Economic Crisis http://ift.tt/1z0MxuX

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