You are confusing two types of deflation: one is monetary deflation, in which the stock of money falls.
And without the ECB as a ready buyer of European sovereign debt when the markets revolt once more, Euro monetary deflation is virtually guaranteed.
More immediate, the Bank of Japan continues its strangulating monetary deflation.
The deflation that you are speaking of is monetary deflation.
While not a gang buster rate of monetary inflation, certainly nothing like we are seeing in the US, it is notable in that the Euro money supply was flirting with monetary deflation mid-2011.
Inflation and deflation are monetary phenomena, yet Brown seems to want to attach to all price movements the two adjectives.
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Generally, he looks at the impact of inflation, deflation and monetary velocity.
The lesson from Japan is that, if there is the slightest risk of deflation, monetary policy needs to be looser than warranted by current economic conditions.
Most serious of all, deflation can make monetary policy ineffective: nominal interest rates cannot be negative, so real rates can get stuck too high.
Once deflation sets in, monetary policy can do little to revive an economy.
Monetary instability--inflation and deflation--distorts that information mechanism.
For once deflation has taken hold, monetary policy becomes a blunt tool.
In contrast, once expectations begin to shift away from continuing yen appreciation and deflation, managing domestic Japanese monetary policy in the transition will be technically intricate.
The second and no doubt leading contributor to the gold bubble has been the world financial crisis of 2008-2009 and the subsequent worldwide central bank policy of monetary expansion to fight financial asset price deflation.
However, because the Fed and ECB have both proclaimed that they are on hold from debt monetization and currency debasement, the same monetary environment that led to the pronounced deflation that occurred during fall of 2008 has arrived once again.
The Fed is conducting monetary policy to counter high unemployment and possible deflation.
Another gold member, James Dines, editor of the Dines Letter, says that the Fed's fear of deflation has prompted a highly stimulative monetary policy.
That is because much looser monetary policy is necessary to stave off recession and deflation in the euro zone.
Any monetary system that uses gold as money will produce deflation, as the economy grows faster than the supply of gold.
Deflation is not a problem in the traditional monetary system and it will not be a problem in the bitcoin economy.
Japan's monetary easing, and expectations it will help reverse persistent deflation, have helped drive the value of the yen down by more than 20 percent against the dollar since October, when it was trading at around 78 yen.
But to nail deflation once and for all, bolder steps by monetary and fiscal authorities are needed.
Abe has pushed both fiscal and monetary stimulus strategies to help Japan end a long bout of deflation and support domestic demand.
The two current nominees are on record as favoring more aggressive monetary easing and BOJ asset purchases with the aim of defeating deflation and stimulating growth.
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But Fisher took both theories to task, arguing that during periods of debt deflation, the forces of deleveraging outweigh the effects of monetary and fiscal stimulus.
But Japan must also act "to finally break free of the deflation trap" and it needed to "rely more on monetary policy to kick-start growth".
Our deflation began in the late 1990s, when the Fed inadvertently tightened monetary policy.
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