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	Deflation (economics) - Wikipedia, the free encyclopedia (Site not responding. Last check: 2007-11-07)
		Deflation should not be confused with disinflation which is a slowing in the rate of inflation, that is, the general level of prices are increasing at a decreasing rate.
		Deflation should not be confused with temporarily falling prices; instead, it is a sustained fall in general prices, or a sustained reduction in the velocity of money which increases the demand for money versus commodities.
		Deflation is generally regarded negatively, as it is a tax on borrowers and on holders of illiquid assets, which accrues to the benefit of holders of liquid assets and currency.
	en.wikipedia.org /wiki/Deflation_(economics) (3332 words)

	EH.Net Encyclopedia: Deflation
		Deflation is a persistent fall in some generally followed aggregate indicator of price movements, such as the consumer price index or the GDP deflator.
		Hence, a deflation is a harbinger of a financial crisis with repercussions for the economy as a whole.
		Unfortunately, the prevailing ideology was that deflation was a purgative of sorts, that is, the price to be paid for economic excesses during the boom years, and necessary to establish to conditions for economic recovery.
	eh.net /encyclopedia/article/siklos.deflation (2814 words)

	CAN DEFLATION BE PREVENTED?
		Deflation, not inflation, is now the greatest concern for the world economy.
		But the appearance of deflation as a widespread problem is disturbing, not only because of its immediate economic implications, but because until recently most economists - myself included - regarded sustained deflation as a fundamentally implausible prospect, something that should not be a concern.
		The logic of deflation in a liquidity trap is the same: it is because spending in the current period is unattractive unless prices are expected to rise that the current price level is pushed down.
	web.mit.edu /krugman/www/deflator.html (2545 words)

	Speech, Bernanke --Deflation-- November 21, 2002
		Deflation is defined as a general decline in prices, with emphasis on the word "general." At any given time, especially in a low-inflation economy like that of our recent experience, prices of some goods and services will be falling.
		Deflation is in almost all cases a side effect of a collapse of aggregate demand--a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.
		Although deflation and the zero bound on nominal interest rates create a significant problem for those seeking to borrow, they impose an even greater burden on households and firms that had accumulated substantial debt before the onset of the deflation.
	www.federalreserve.gov /BOARDDOCS/SPEECHES/2002/20021121 (6223 words)

	Risk of Global Deflation Relatively Small, IMF Says, May 19, 2003
		Deflation occurs when price declines are so widespread that broad-based indexes of prices, such as the consumer price index, register ongoing declines stemming from a dramatic drop in aggregate demand.
		There is a high risk that deflation in Japan could accelerate from the current rate of ½ to 1 percent to 2 percent or higher if the unemployment rate were to increase from 5 ½ to 6 ½ percent, or if GDP growth were to remain flat over the next year.
		The study examines the costs of deflation and puts forward a range of policies for proactively averting it in countries where the indicator of risk is high.
	www.usembassy.it /file2003_05/alia/A3051907.htm (597 words)

	Guardian Unlimited \| Today's issues \| Deflation
		Deflation is defined as a sustained decline in price levels, or as the Collins English Dictionary has it: "A reduction in the level of total spending and economic activity resulting in lower levels of output, employment, investment, trade, profits and prices."
		Historical experience has shown that once deflation sets in, it is incredibly hard to shake it off, as Japan is discovering.
		But the most notorious period of deflation occurred in the US in the great depression of the 1930s, when a fall in prices was coupled with a sustained fall in gross domestic product.
	www.guardian.co.uk /theissues/article/0,6512,959334,00.html (760 words)

	Inflation to Deflation and Back? - Graziadio Business Report
		He stated that deflation was currently more of a worry than was inflation, although he thought the chance that the U.S. economy would face deflation was remote.
		His statement made deflation a hot topic for the first time since the 1930s when the economies of the world faced global deflation.
		Deflation is now a concern, though it was once thought to be healthy for the Japanese economy – since lower prices would improve the lives of consumers.
	gbr.pepperdine.edu /034/deflation.html (2076 words)

	The Definition of Deflation :: Deflation :: DollarSigns.org (Site not responding. Last check: 2007-11-07)
		Deflation is caused by currency increasing in value faster than the goods and services it can purchase.
		As an article by Alf Field explains, "Deflation is a collapse of a debt pyramid when it becomes 'excessive' and debtors cannot fulfill their debt obligations.
		He claims that there is only one possible scenario where deflation would occur: "If there were a crisis in the derivatives market, and fractionally reserved banks could not clear accounts with each other, that would cause deflation on a scale undreamed of", or in other words, total economic meltdown.
	www.dollarsigns.org /archive/TheDefinitionofDeflation.php (786 words)

	What is deflation, what are the risks of deflation, and how can the Fed combat deflation? (05/2003)
		Deflation creates incentives to save and postpone spending because prices will be lower and purchasing power greater in the future.
		Deflation is defined as a general decline in prices, with emphasis on the word "general." …Deflation per se occurs only when price declines are so widespread that broad-based indexes of prices, such as the consumer price index, register ongoing declines.
		Deflation is in almost all cases a side effect of a collapse of aggregate demand—a drop in spending so severe that producers must cut prices on an ongoing basis in order to find buyers.
	www.frbsf.org /education/activities/drecon/2003/0305.html (1362 words)

	Morgan Stanley (Site not responding. Last check: 2007-11-07)
		Today’s strain of deflation risk is first and foremost a story of the cyclical imbalances and structural flaws in real economies — problems that are far from amenable to the so-called monetary fix.
		Deflation risks should be viewed as a wake-up call for a dysfunctional global economy.
		Given the difficulty of turning around deflation expectations once they have taken hold, there is a case for using stronger-than-usual measures in order to stabilise inflation expectations, even if the central bank does not believe that deflation is particularly likely.
	www.morganstanley.com /GEFdata/digests/20030521-wed.html (3121 words)

	What is Deflation? Article
		Deflation can also be brought about by direct contractions in spending, either in the form of a reduction in government spending, personal spending or investment spending.
		Deflation has often had the side effect of increasing unemployment in an economy, since the process often leads to a lower level of demand in the economy.
		Everyone assumes that deflation is bad because the last major deflation that we had was during the "Great Depression" so deflation and Depression are synonymous in many peoples minds.
	inflationdata.com /inflation/Articles/Deflation.asp (899 words)

	Deflation (Site not responding. Last check: 2007-11-07)
		Deflation is the worst economic scenario, so it is no surprise that they turn a blind eye publicly even when they are furiously working behind the scenes to prevent it and control it.
		One of the ways of denying deflation is to strictly define it only as "a pervasive and constant price decline in all areas of the economy caused by a reduction in credit available or the money supply." While this is one definition, it is not the only definition.
		While this is a result of deflation at its worst, it is not the only way to tell you have deflation.
	www.cornerstoneri.com /comments/deflation.htm (880 words)

	Edward Hugh Deflation
		Deflation is a generalised and sustained fall in prices, with the emphasis on generalised and sustained.
		To better understand the nature of deflation, this paper looks back to a period when deflation was a regular feature of the economic environment, across both time and a wide set of countries.
		During the 19th century and early 20th century, deflation was not generally associated with persistent and deep economic malaise.
	www.edwardhugh.net /deflation.html (3947 words)

	Ramesh Ponnuru on Deflation on National Review Online
		Whether deflation is imminent has been the subject of some debate, with the latest comments by the Federal Reserve strengthening the "yes" camp (even though those comments were hedged).
		Deflation based on productivity increases need not have the harmful economic effects associated with deflation based on a collapse in the money supply or of consumer spending.
		The kind of deflation that you really want to worry about is not the kind caused by a greater output of commodities or finished goods.
	www.nationalreview.com /ponnuru/ponnuru053003.asp (666 words)

	Good Deflation and Bad Deflation by Martin Hüfner - The Globalist > > Global Economy
		Deflation is bad when people hold back spending to save for an uncertain future — or in the expectation of lower prices.
		We have bad deflation when people are uncertain about the future, are afraid of losing their jobs, when government becomes over-indebted — and when people fear higher taxes.
		Deflation began in Japan at the end of the 1990s when the government raised the value added tax (VAT) to counter huge increases in the country's public debt.
	www.theglobalist.com /DBWeb/StoryId.aspx?StoryId=3295 (1101 words)

	What does deflation mean to investors?
		Before we delve right into the topic of deflation, it should be noted that the causes and effects of deflation are complex economic forces.
		Deflation is a macroeconomic condition in which a country is experiencing lowering prices.
		This is the opposite of inflation which is characterized by rising prices (do not confuse deflation with disinflation, which is simply a slowing of inflation).
	www.investopedia.com /ask/answers/202.asp (320 words)

	Rethinking Deflation
		On Nov. 10, 1997, the Business Week cover was "The threat of deflation." Much of that analysis was based on the stubborn Keynesian mythology that strong economic growth is inflationary, therefore, weak growth (at that time in Asia) must be deflationary.
		What appears to be a surplus of goods during such a deflation is really a shortage of money, so people have to liquidate goods and assets to obtain the cash they want (for security) or need (to pay their bills).
		I certainly did not mean we were anywhere near an actual deflation, but that we could be heading in that direction unless the Fed reversed course (as it did).
	www.cato.org /dailys/11-08-02.html (823 words)

	‘G7 to discuss deflation at Paris meeting’ -DAWN - Business; January 5, 2003
		Deflation is not something that was brought about by reasons attributed only to Japan, the source was quoted as saying.
		Tackling the deflation that has plagued the Japanese economy has been a key issue for the country’s policymakers, and Economics Minister Heizo Takenaka said last month that ending deflation was a top priority for Japan.
		Once deflation is brought about, it is difficult to rid oneself of it, he said.
	www.dawn.com /2003/01/05/ebr15.htm (390 words)

	Deflation - Access to Energy - Pro-Science, Pro-Technology, Pro-Freedom
		To those who have no debt, some savings, and an ability to continue with their ordinary work and personal lives even if their incomes markedly contract, deflation is tolerable - even advantageous, since correction of economic excesses sets the stage for the next expansion.
		This would be deflation on a scale that no rational amount of government money creation could hope to counteract.
		There is an excellent chart of gold price vs. the price of one share of each of the Dow Jones Industrial Average stocks during the past century at web address http://www.gold-eagle.com/editorials_98/jmiller082498.html.
	www.accesstoenergy.com /view/ate/s41p792.htm (581 words)

	Deflation Nation - Could falling prices send the U.S. into a Japanese-style recession? By Robert Shapiro
		Economists were not surprised, because inflation or deflation can often be foreseen by looking at the gap between an economy's potential and what it actually produces.
		Deflation won't make us stronger, as price cutting did for Dell; nor will it drive us to a Kmart-type bankruptcy, as it nearly has in Japan.
		On the positive side, the retrenchment that deflation usually breeds can weed out inefficient producers and spur companies to drive for greater efficiency, which is helpful for future productivity.
	www.slate.com /?id=2070665 (1255 words)

	Deflation, inflation, money, credit and debt
		Deflation requires a precondition: a major societal buildup in the extension of credit (and its flip side, the assumption of debt).
		Deflation involves a substantial amount of involuntary debt liquidation because almost no one expects deflation before it starts.
		The psychological aspect of deflation and depression cannot be overstated.
	www.elliottwave.com /deflation (2518 words)

	Whiskey Bar: Deflation Nation (Site not responding. Last check: 2007-11-07)
		Deflation is such rarity -- at least in the modern era, and at least here in the United States -- that it has to be regarded as the ultimate economic wild card.
		Deflation may not have been the rule, but it was hardly the exception under Capitalism 1.0.
		Deflation basically only hurts those who have planned on the assumption that prices will continually be rising, especially those who borrow on that assumption.
	billmon.org /archives/000946.html (9367 words)

	BW Online \| May 26, 2003 \| Deflation Nation
		Deflation was a big factor in that crisis, too: It helped cripple industrial production around the world and drive unemployment sky-high.
		The country has been living with deflation in one form or another for a decade now, and while there's definitely a slow-motion crisis playing out, there's no sign yet of a Depression-level blowout.
		Still, the paradox of Japan's experience with deflation is that for one segment of Japanese -- retirees -- life has never been better.
	www.businessweek.com /magazine/content/03_21/b3834011_mz046.htm (3390 words)

	Deflation
		In Deflation, Dr. Shilling pinpoints 14 major deflationary forces, ranging from cuts in defense spending to the impact of the Internet to global glut intensified by the spread of market economies like China.
		Deflation has not only been prescient, but it is the first and only book in print that analyzes today's unfolding deflationary tendencies and predicts their effects.
		The impact of deflation on domestic and global businesses, corporate profits, equities, and bonds will require you to revamp your investment and business strategies for success.
	www.agaryshilling.com /deflation.html (257 words)

	Inflation or Deflation? (Site not responding. Last check: 2007-11-07)
		Deflation is the condition that occurs when relatively less money is available to bid on relatively more goods and services.
		Inflation and deflation are mighty macro-economic tides that affect an entire economy and they are almost impossible to discern in a narrow sample of goods and services.
		Thus far, we know that inflation and deflation are exclusively monetary phenomena, that they broadly affect an entire economy, and that price movements of individual goods and services are primarily supply and demand driven and not indicative of inflation or deflation.
	www.zealllc.com /commentary/infordef.htm (5283 words)

	Deflation Update
		Deflation and the value of the dollar are two of the topics on the US economy agenda, so I am grateful to Lloyd at Macro Mouse for sending me two links.
		The main point of the theory is that over indebtedness acts in conjunction with deflation to produce a contracting economy causing bankruptcies, rising unemployment and falling profits.
		In the second section, “The Roles of Debt and Deflation”, he provides a theory of how excess debt and the consequent deflation play a major role in the boom bust cycle.
	deflationupdate.blogspot.com (19734 words)

	The Imaginary Evils of Deflation - Mises Institute
		Deflation is popularly defined as a general fall in prices; it is the opposite of what most people generally think of as inflation.
		Bank credit deflation, Salerno asserts, âhas a salutary effect on the economy and enhances the welfare of market participantsâ¦.Bank credit deflation is a benign and purgative market adjustment process.â Obviously, you cannot have a bank credit deflation without first having bank credit inflation.
		Confiscatory deflation, in addition to being an act of outright thievery by a government, also is tremendously harmful to the marketâs participants.
	www.mises.org /fullstory.asp?control=1040 (1166 words)

	The Deflation Hysteria
		You might even think a little deflation would be much-needed reparation for a century of inflation that has eroded the value of a 1900 dollar to a nickel.
		First, it is said that deflation increases the burden of debt.
		Second, deflation disarms the Fed. The conundrum here is that as the Fed lowers interest rates to encourage borrowing to stimulate the economy, deflation works at cross purposes to discourage borrowing and encourage stockpiling money for the future.
	www.lewrockwell.com /rockwell/deflation.html (843 words)

	MPR: Deflation History
		American history is marked by recurring periods of deflation and inflation, what economists describe as the natural ebb and flow of any market economy.
		That led to inventories swelling and workers being laid off or work weeks being cut, and spiral downwards then from that point in 1929 to really a low point, say, in 1932-33, when about a third of the work force was out of work altogether.
		Americans today remember the Great Depression, but there was another dramatic period of deflation worth recalling, an era in which Americans fought an intense battle over the very value of money.
	news.minnesota.publicradio.org /features/199803/18_smiths_depression (1511 words)

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