The Inflation Vs. Deflation Tug Of War Summary
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Posted On: 04/29/2020 5:11:59 PM
The Inflation Vs. Deflation Tug Of War
Summary
The most hotly debated topic in macroeconomics today surrounds which monetary force is coming, inflation or deflation.
For the past 40 years, the US economy has been grappling with disinflation, or falling rates of inflation, which has pushed bond yields to new record lows.
Will the unprecedented monetary and fiscal response to the ongoing economic crisis reverse this trend, or will it exacerbate the existing pattern and finally tip the economy into deflation?
Most analysts agree the short-term impact is very deflationary, but the disagreement comes in the multi-year view.
I argue that unless Congress makes significant changes to our monetary system, any increase in inflation will likely be transitory and increasingly fleeting. Excessive levels of debt tilt the bias toward deflation.
https://seekingalpha.com/article/4340323-infl...ent=link-0
Summary
The most hotly debated topic in macroeconomics today surrounds which monetary force is coming, inflation or deflation.
For the past 40 years, the US economy has been grappling with disinflation, or falling rates of inflation, which has pushed bond yields to new record lows.
Will the unprecedented monetary and fiscal response to the ongoing economic crisis reverse this trend, or will it exacerbate the existing pattern and finally tip the economy into deflation?
Most analysts agree the short-term impact is very deflationary, but the disagreement comes in the multi-year view.
I argue that unless Congress makes significant changes to our monetary system, any increase in inflation will likely be transitory and increasingly fleeting. Excessive levels of debt tilt the bias toward deflation.
https://seekingalpha.com/article/4340323-infl...ent=link-0
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