<iframe src="//www.googletagmanager.com/ns.html?id=GTM-K3L4M3" height="0" width="0" style="display:none;visibility:hidden">

Features

How to fight Europe’s demons of deflation

It’s a real problem, but the answer has less to do with bond-buying than with applied psychology

22 November 2014

9:00 AM

22 November 2014

9:00 AM

Deflation terrifies economists because once it starts, they have no idea what to do about it. When demand in an economy shrinks, companies cut jobs, and with fewer employed demand shrinks even more. The deflationary spiral is self-reinforcing. Central banks can cut interest rates to near zero and slosh money around like drunken lottery winners, but once hope flickers and dies, there is nothing they can do to persuade anyone to invest in the economy.

Already a subscriber? Log in

Easter flash sale:
10 issues for $1

Subscribe this Easter and get the next 10 issues of the magazine, plus website and app access, all for just $1.

  • Weekly delivery of the magazine
  • Unlimited access to spectator.com.au and app
  • Spectator Australia podcasts and newsletters
  • Full access to spectator.co.uk
Or

Unlock 3 articles a month

REGISTER

You might disagree with half of it, but you’ll enjoy reading all of it. Try your first month for free, then just $2 a week for the remainder of your first year.


Comments

Easter flash sale: 10 issues for $1

Join the conversation with other Spectator Australia readers. Subscribe to leave a comment.

Already a subscriber? Log in

Close