The Symptom of Deflation

Deflation 101: It’s critical to keep in mind that deflation is a symptom of weak demand but it is not necessarily a cause. If we attack the symptom of falling prices with a dose of inflation, we risk having 2 problems not 1–inadequate real demand and unwanted inflation. Yes, deflation has hurt Japan but they have an insoluable problem of inadequate corporate demand and a shrinking population.