Deflation
in sentence
696 examples of Deflation in a sentence
Excluding Japan, which remains mired in seemingly chronic deflation, Asian inflation rose to 5.3% in the 12 months ending in November 2010, up markedly from the 3.5% rate a year earlier.
This is a proposal whose time has come because the world economy is hovering on the brink of
deflation.
These countries must now engineer substantial real wage and price
deflation
in order to regain competitiveness and reduce their trade deficits.
The populist right has traditionally adopted quasi-leftist rhetoric in times of
deflation.
Japan, struggling against two decades of stagnation and deflation, had to resort to Abenomics to avoid a quintuple-dip recession.
When some countries in the eurozone are hit by adverse demand shocks, the target determines the extent of painful wage and price
deflation
these countries must undergo to readjust.
The lower the target, the more
deflation
they must bear.
US financial institutions should have continued to lend to distressed borrowers, in order to prevent a spiral in which credit rationing forced price reductions and intensified world
deflation.
Rather, we now know that Japan’s economic difficulties were caused by the growth, and then collapse, of a huge asset bubble, and the failure to use monetary policy to prevent
deflation
after the bubble burst.
But while Japan’s banking system helped drive stunning post-war growth, its credit-fueled real-estate boom in the 1980s and subsequent bust led to 25 years of slow growth and creeping
deflation.
For the Bank of Japan (BoJ), which committed an unprecedented arsenal of unconventional policy weapons to arrest a 19-year stretch of 16.5%
deflation
lasting from 1994 to 2013, this is more than just a rude awakening.
Manna from HelicoptersLONDON – In recent years, the global economy has been plagued by inadequate demand and the rising risk of
deflation.
In periods characterized by deflation, helicopter money is as close to a free lunch as economics has to offer.
When an economy is at risk of falling into deflation, a central bank can change interest rates, temporarily increase the monetary base, or increase it permanently.
He warned that if the international community did not come together, “vicious cycles” of deflation, liquidity traps, and increasingly pessimistic expectations could take hold.
Deflation
is potentially a very serious problem, because falling prices – and the expectation that prices will continue to fall – would make the current economic downturn worse in three distinct ways.
The most direct adverse impact of
deflation
is to increase the real value of debt.
Just as inflation helps debtors by eroding the real value of their debts,
deflation
hurts them by increasing the real value of what they owe.
While the very modest extent of current
deflation
does not create a significant problem, if it continues, the price level could conceivably fall by a cumulative 10% over the next few years.
In addition to this increase in the real cost of debt service,
deflation
would mean higher loan-to-value ratios for homeowners, leading to increased mortgage defaults, especially in the US.
The second adverse effect of
deflation
is to raise the real interest rate, that is, the difference between the nominal interest rate and the rate of “inflation.”
Because the US Federal Reserve and other central banks have driven their short-term interest rates close to zero, they cannot lower rates further in order to prevent
deflation
from raising the real rate of interest.
With deflation, we are heading into unknown territory.
Some economists have said that the best way to deal with
deflation
is for the central bank to flood the economy with money in order to persuade the public that inflation will rise in the future, thereby reducing expected real long-term interest rates.
Ironically, although central banks are now focused on the problem of deflation, the more serious risk for the longer term is that inflation will rise rapidly as their economies recover and banks use the large volumes of recently accumulated reserves to create loans that expand spending and demand.
But worries about potential
deflation
scenarios are unwarranted.
Such measures would only exacerbate
deflation
in these countries, which are the most important markets for German exports.
This pitiful performance incites angry cries that American jobs are disappearing abroad, and that low-cost exports may result in
deflation.
General
deflation
eliminates the capital of yet more financial intermediaries, and makes risky an even larger share of assets that had previously been regarded as safe.
France’s role would be to ensure that the weaker countries don’t fall victim to enduring
deflation.
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