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deflation economics

This is the famous Brian Lenihan, Ireland's Minister for Finance, mentioned deflation in an interview with RTÉ Radio. If you were desperate enough in 1931 for money to buy basic necessities, you could get 60 to 70 cents on the dollar for your passbooks' value. The opposite is true of highly indebted businesses with little cash holdings. Deflation is defined as a decrease in the general price level. Economic deflation is when an economy experiences declining prices for goods and services. Trying to navigate the market and economic conditions with investment strategies is a form of

Definition: When the overall price level decreases so that inflation rate becomes negative, it is called deflation.It is the opposite of the often-encountered inflation. It can occur in recessions, and become a self-fulfilling prophecy if consumers cut back on spending. Why does Deflation matter? Deflation. The Minister mentions the deflation as an item of data helpful to the arguments for a cut in certain benefits. With deflation alarms ringing again at the European Central Bank, August's price shock piles pressure on it to ape the Federal Reserve's looser … However, deflation increases the economic power of savings-based equity financing. Description: A reduction in money supply or credit availability is the reason for deflation in most cases.Reduced investment spending by government or individuals may also lead to this situation. Deflation also occurs when improvements in production Debt deflation is a complicated phenomenon associated with the end of long-term credit cycles. Its scope was global. It delivered a generation’s worth of rising bond prices, as well as the usual losses to unwary creditors via defaults and early calls. If the price level falls, an economy experiences price deflation. In particular, deflation can harm borrowers, who can be bound to pay their debts in money that is worth more than the money they borrowed, as well as any financial market participants who invest or speculate on the prospect of rising prices. A recent example of deflation occurred during "The Great Recession" of 2007-2008, where the inflation rate fell below 0%. Aggregate demand is the total amount of goods and services demanded in the economy at a given overall price level at a given time.

"Bad deflation" is a more difficult concept to define. The first and most severe was during the depression in 1818–1821 when prices of agricultural commodities declined by almost 50%. In this regard, deflation is the opposite of inflation, where the cost of goods and services is rising.

This is distinct from but similar to general price deflation, which is a general decrease in the price level and increase in the purchasing power of money. Following the Great Depression, when monetary deflation coincided with high unemployment and rising Most damaging was the price of cotton, the U.S.'s main export. Paulsen simply states that "bad deflation has emerged because even though selling price inflation is still trending lower, corporations can no longer keep up with cost reductions and/or efficiency gains."

There are many reasons why the media’s economics is … Great Depression of the 1930s, and the less catastrophic but more recent experience of … The deflation of such a stupendous amount of debt will overwhelm everything in its path.

(So if it goes into a negative number, that's deflation.) This will depend on how much delinquent Deflation is a general decline in prices for goods and services, typically associated with a contraction in the supply of money and credit in the economy. For example, in the late 19th century, populists in the US wanted debt relief or to move off the new gold standard and onto a silver standard (the supply of silver was increasing relatively faster than the supply of gold, making silver less deflationary than gold), bimetal standard, or paper money like the recently ended During severe deflation, targeting an interest rate (the usual method of determining how much currency to create) may be ineffective, because even lowering the short-term interest rate to zero may result in a real interest rate which is too high to attract credit-worthy borrowers.

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