Reply To: Deflation


Jamie, take a look at Joe Salerno’s article on a taxonomy of deflation. Depending on the monetary system and the cause of deflation, it can be benign or malignant. In the free market economy, price deflation is benign. In an interventionist economy with a central bank and fractional-reserve commercial banking, some forms of deflation are malignant.

The article is “An Austrian Taxonomy of Deflation” and appears as chapter 10 in Salerno’s book, _Money, Sound and Unsound_.,%20Sound%20and%20Unsound.pdf