Deflation Talk

It’s All Just Math
A Price Level Adjustment
Cathie Wood on Deflation
The Right Question on Deflation/Inflation Is When
New York, Florida? And a Book Recommendation

If you could ask the world’s top central bankers what really terrifies them, I think the honest answer would usually be “deflation.” It is their greatest nightmare. They think a little inflation is good (thus the 2%+ target), and they’re confident they can subdue it if necessary. Deflation is a bigger problem.

Let’s note, however, that these aren’t either/or conditions. They have degrees of severity. Indeed, the last four decades we’ve seen disinflation—a mild form of deflation—in many segments of the economy. Compared to that, even relatively mild inflation looks quite concerning. And many smart people are concerned, as I described in last week’s review of SIC inflation talk.

Today we’ll consider the other side of the SIC inflation/deflation argument. And when I say “argument,” I don’t mean the harsh kind. One of the SIC’s nicest features is the way people with vastly different viewpoints engage civilly and thoughtfully. Unlike “debates” that generate more heat than light, we sincerely look for the best answers—a refreshing rarity in this divisive era. Another reason you should get your pass and watch/read/listen to every session.