June 05, 2014
It was gratifying to see the following in the Washington Post:
“It’s called ‘lowflation,’ and it’s crippling Europe. It’s, simply enough, inflation that’s well below target. Now, there’s a common misconception that low, positive inflation is alright, but low, negative inflation is the end of the world. As the IMF points out, though, these are continuum of the same problem. See, it doesn’t really matter whether prices aren’t rising enough or are actually falling. In either case, it’s harder to pay back debts, harder for real wages to adjust, and harder for countries to regain competitiveness. Of course, deflation is worse than lowflation, but not so much that we should fear the former and not the latter. We should fear them both.”
For those of us who have been making this simple point as loudly as possible for many years (here, for example) it is good news to finally see its truth finally recognized by the honchos in the profession and the reporters who defer to them. It just proves that if you say something that is true long enough, the right people will eventually repeat it.
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