Conjecture on Reversing Deflationary Expectations.

By: Flagstaff (Diary)  |  February 4th at 02:55 AM  | 

Civil Truth posed some questions recently, and in attempting to answer them I developed this blog entry.  His questions were about today’s deflationary pressures and inflationary expectations. I don’t think we have deflationary pressures and inflationary expectations.  We have primarily deflationary “pressures,” creating deflationary expectations today.  I don’t think our fiscal and monetary policies are at odds–they are both inflationary at the moment, about the | Read More »

If we can’t cure the economic cold, maybe we should bring on economic pneumonia.

By: Flagstaff (Diary)  |  December 18th at 07:12 PM  | 

You remember the old joke to that effect?  We know how to cure pneumonia? Blackhedd recently provided an explanation of how “a zero nominal interest rate might correspond to a real interest rate that is hundreds of basis points higher” if expectations are for a deflationary period. I took it to mean that since the original principal must eventually be repaid, even a zero interest | Read More »