For most policymakers, deflation is the stuff of nightmares -- scarier even than bank failures and stock market collapses. As the economy stumbled, deflation became Lords Voldemort and Sauron rolled into one.
The Great Debate
Sure, seeing your economy shrink at a 15 percent annual clip is depressing, quite literally, but if you believe in even a tepid global economic recovery in the second half, then Japan is actually attractive.
— John Kemp is a Reuters columnist. The views expressed are his own —
LONDON, Nov 24 (Reuters) – For the second time in less than a decade, the spectre of deflation is stalking western economies and filling acres of newsprint. But the focus on deflation is based on a misreading of history and risks diverting attention from more pressing problems.
With the U.S., Japan and Britain — nearly 40 percent of the global economy — facing the threat of deflation, it’s going to be just too easy for one, two or all three of them to get the policy response horribly wrong.