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Is Price Deflation a Possibility in the Near US Future?

Posted by Alex Chafuen
October 30, 2013
in Blog

Those of us who experienced the destructive effects of monetary inflation have the reason to be surprised when pro-free market think tanks appear to defend easy money policies.    This new piece by John H. Makin, Beware The Monetary Cliff from AEI, does just that.  His fears:

  • Over the past two years, inflation rates in the US, Europe, and China have drifted steadily lower while Japan’s inflation rate has recovered only modestly.
  • If deflation occurs, real wages will rise even faster, and, and employment growth will be weaker.
  • Fed Chairman Bernanke and soon-to-be chairman Yellen should make avoiding deflation a more clearly stated Fed objective.

I could come with a much longer litany with my fears of the impact of the political manipulation of monetary policy.   I recommend again the piece by Allan Meltzer, current president of the Mont Pelerin Society, about why inflation remains low http://www.soundmoneyproject.org/?p=9187  .    Many more economies and societies have suffered the consequences of inflation than deflation and I see more signs of new bubbles than of crumbling prices.

One Comment

  1. Tamara Y. Blankenship November 12, 2013 7:18 PM

    I could come with a much longer litany with my fears of the impact of the political manipulation of monetary policy. I recommend again the piece by Allan Meltzer, current president of the Mont Pelerin Society, about why inflation remains low http://www.soundmoneyproject.org/?p=9187 . Many more economies and societies have suffered the consequences of inflation than deflation and I see more signs of new bubbles than of crumbling prices.