The fed went from deflation, sort of stalling the engine to flooding the engine. |
What's particularly insidious about deflation is that output doesn't necessarily have to contract for its poison to spread through the economy. |
The signs portending deflation are all-around for those who have eyes to see. |
The last section provides three studies that explore the behavior of asset prices during deflations. |
Historically, most deflations have been benign, caused by technological innovation and associated with robust growth. |
Not every strong decline in asset prices causes deflation, but all major deflations in the world were related to a sudden, continuing and substantial fall in values of assets. |