A Quote by Christine Lagarde
If inflation is the genie, then deflation is the ogre that must be fought decisively.
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Deflation isn't good, and inflation is easier to cure than deflation.
With QE3, we are essentially being bought out with our own money...and unemployment is being used to facilitate this process in a very clever manner. Monetary inflation is currently being offset by labor deflation. The way you avoid collapse is by printing money and stealing assets. The way you avoid inflation is with labor deflation.
Near-zero policy rates that may be considerably expansionary in an economy with high inflation could be contractionary when inflation is too close to zero, or worse, deflation has set in.
Significant changes in the growth rate of money supply, even small ones, impact the financial markets first. Then, they impact changes in the real economy, usually in six to nine months, but in a range of three to 18 months. Usually in about two years in the US, they correlate with changes in the rate of inflation or deflation."
"The leads are long and variable, though the more inflation a society has experienced, history shows, the shorter the time lead will be between a change in money supply growth and the subsequent change in inflation.
The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.
The Ogre does what ogres can,
Deeds quite impossible for Man,
But one prize is beyond his reach,
The Ogre cannot master Speech:
About a subjugated plain,
Among its desperate and slain,
The Ogre stalks with hands on hips,
While drivel gushes from his lips.
See your disappointments as good fortune. One plan's deflation is another's inflation.
No central banker would disagree with the proposition that inflation is primarily a monetary phenomenon. Not one of them will disagree that every inflation has been accompanied by a rapid increase in the quantity of money and every deflation by a decline in the quantity of money.
Our purpose is to lean against the winds of deflation or inflation, whichever way they are blowing.
The sources of deflation are not a mystery. 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.
When they say inflation is bad, deflation is good, what they mean is, more money for us 1% is good; we're all for asset price inflation, we're all for housing prices going up, and we're all for our stock and bonds prices going up. We're just against you workers getting more income.
The entire political class and ruling Wall Street class are zero-percent-interest zombies who talk about 'deflation' in the value of their second, third, and fourth homes. This is paper-deflation, zombie-deflation, and has nothing to do with the real economy.
Despite the recent conviction of many that we're headed back to inflation, I think deflation remains the more likely prospect. You've just got too much excess capacity in the world.
I've learned about the inflation range situation. Obviously with our footballs being inflated to the 12.5-pound range, any deflation would then take us under that specification limit. Knowing that now, in the future we will certainly inflate the footballs above that low level to account for any possible change during the game.
Inflation is not always the main problem, or indeed a problem at all. Sometimes, though rarely, deflation is a more serious threat, and we need to shelve many of the orthodoxies we have held so dear.
An army that fought and won a war decisively finds it even more difficult to undergo change.
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