Deflation
in sentence
696 examples of Deflation in a sentence
This deflationary tendency will create serious economic problems, which do not necessarily result from
deflation
as such, but may stem from a natural resistance to
deflation.
Moreover, even if prices on average exhibit some downward flexibility,
deflation
necessarily increases the real rate of interest, given that nominal interest rates cannot fall below zero.
Japan provides good lessons about where the true risks are, as it has been suffering from
deflation
or near-deflation for 14 years.
Employment growth continues to disappoint, and fears of
deflation
will not go away.
If fears of
deflation
were to recede, and if output and employment were to grow more vigorously, the pressure for a protectionist response would dissipate.
The villain of the piece, then, is not China, but the US Federal Reserve Board, which has been reluctant to use all the tools at its disposal to vanquish
deflation
and jump-start employment growth.
The years since then have seen the fastest global average income growth rate of any generation, as well as remarkably few outbreaks of mass unemployment-causing
deflation
or wealth-destroying inflation.
In Japan, there seems little hope that the world's second-largest economy can extricate itself from its homemade
deflation
trap to generate the demand needed to offset economic weakness elsewhere in the world.
Four years of
deflation
and a drawn-out banking crisis offer little prospect of economic stimulus.
Given deleveraging from high private and public debts, unconventional monetary policies could prevent severe recessions and outright deflation; but they could not bring about robust growth and 2% inflation.
So, like it or not, central banks became and still are the only game in town when it comes to supporting aggregate demand, lifting employment, and preventing
deflation.
And, in view of persistent lackluster growth and
deflation
risk in most advanced economies, monetary policymakers will have to continue their lonely fight with a new set of “unconventional unconventional” monetary policies.
The next stage of unconventional unconventional monetary policy – if the risks of recession,
deflation
and financial crisis sharply increase – could have three components.
Likewise, though Japan’s “Abenomics,” by depressing the yen, complicates policymaking for the country’s neighbors, it also constitutes a commendable effort to bring
deflation
to a long-overdue end.
It puts upward pressure on US prices, which is helpful when there is a risk of
deflation.
But when
deflation
looms, upward pressure on prices is just what the doctor ordered.
Japan’s achievement of full employment and high job growth over the last two decades is all the more noteworthy in view of near-permanent
deflation
during this period (most prices are still lower today than they were 15-20 years ago).
This should give food for thought to those who maintain that
deflation
imposes unbearable economic costs.
Recently, Vogel has described Japan’s political system as “an absolute mess,” with prime ministers replaced almost every year and the youngest generation’s expectations sapped by years of
deflation.
A higher exchange rate would undermine job creation and would contribute to deflation, which China is successfully combating.
Moreover, if
deflation
were to become entrenched in the eurozone and other parts of the world, a negative nominal return could be associated with a positive real return.
That has been the story for the last 20 years in Japan, owing to persistent
deflation
and near-zero interest rates on many assets.
The only other way to achieve depreciation in real terms is through massive
deflation
of domestic prices, coupled with a severe recession.
And, if the price level should fall, a newly issued TIPS bond will return the original nominal purchase price, thus providing a hedge against
deflation.
This comes after years of declarations by prominent economists, including Berkeley’s Brad DeLong and former US Federal Reserve Chair Ben Bernanke, that helicopter money offers a way to overcome
deflation
(with which Japan has struggled for decades).
In the early 1930s, under Finance Minister Takahashi Korekiyo, Japan implemented money-financed deficit spending, in order to lift the economy out of
deflation.
Nevertheless, their religious faith in privatization, unfettered markets, and monetarism led them to over-hasty asset sales, reckless deregulation, and savage
deflation.
From Stephen Roach at Morgan Stanley to Paul Krugman at Princeton, to the Governors of the US Federal Reserve and the senior staff at the European Central Bank, to almost everyone in Japan, economists all over the world are worrying about
deflation.
Their thoughts retrace the economic thinking of over fifty years ago, a time when economists concluded that the thing to do with
deflation
was to avoid it like the plague.
Back in 1933 Irving Fisher --Milton Friedman's predecessor atop America's monetarist school of economists-- announced that governments could prevent deep depressions by avoiding
deflation.
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