Deflation and Economic Recovery

I just did a story arguing that deflation might help economic recovery. Here’s a piece:

Is price deflation a sign of an accelerating economic downturn? History is not encouraging. Periods with falling prices—consider Japan in the 1990s and the Great Depression—have been unhappy times, economically.

But there’s another possibility: The fall in some consumer prices could be part of the “normal” adjustment to unprecedented economic circumstances. These price declines, combined with the coming “wall of money”—the enormous monetary and fiscal stimulus on the way in 2009—could actually accelerate an economic rebound

Read more here.

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