"... first by inflation and then by deflation, ..."
November 20, 2008 4:28 AM Subscribe
posted by Mutant (92 comments total)
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Tangible evidence of deflation?
The prices of commodities
and a wide range of consumer goods
have collapsed, with observers predicting continued declines
. While many point back to The Great Depression
as an example of damaging deflation, the recession of 1920-1921, a frequently overlooked period in economic history
, is perhaps the best example we've got of a deflationary wave similar to what might now taking place.
During the period 1920 to 1921, wholesale prices declined some 36%, "the largest one year decline on record"
[.pdf] . By contrast, US CPI declined 1% for the month of October alone
(roughly 13% annualised), the largest drop observed in 61 years, and a rate that may accelerate
as The Great Unwinding continues.
Deflation: The Good, The Bad and The Ugly
. Excellent single link deflation Q&A
1Vernon, J., R., 2007, The 1920-21 Deflation: The Role of Aggregate Supply, Economic Inquiry, Volume 29 Issue 3, pp 572 - 580