Price deflation is not a disaster, but a blessing
The ECB has finally launched its own open-ended Quantitative Easing (QE) planning to buy securities worth of €1.1tr euros. This unprecedented move requires a convincing justification. One argument in favor of QE is the low rate of price inflation in the Eurozone which allows the ECB to sell its program as countering a slide into deflation. Deflation is widely considered as the worst case scenario. The Economist claimed that deflation is “the world´s biggest economic problem”. Christine Lagarde called deflation an “ogre.”
But is the deflation phobia really justified? Is price deflation a problem for the economy as a whole?
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But is the deflation phobia really justified? Is price deflation a problem for the economy as a whole?
Mais
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