Wednesday, 24 December 2008

Deflation virus is moving the policy test beyond the 1930s extremes

by Ambrose Evans-Pritchard from The Telegraph 9 December 2008 We are beyond the extremes of the 1930s. The frontiers of monetary policy are being pushed to limits that may now test viability of paper currencies and modern central banking.You cannot drop below zero. So what next if the credit markets refuse to thaw? Yes, Japan visited and survived this policy Hell during its lost decade, but that was a local affair in an otherwise booming global economy. It tells us nothing.

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