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Non-Tech : Deflation
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To: jwk who wrote (23)1/6/2000 12:24:00 AM
From: JF Quinnelly  Read Replies (1) of 621
 
Personally, I favor the disinflation, rising productivity, tech advances road to universal well being,

But you had all three of these in the 1920s. It appears as if the productivity-induced deflation of the '20s fooled the Fed into permitting too much credit growth-- had they not attempted to maintain a constant price level, prices generally would have dropped due to the increased productivity. But the absence of inflation in the price level allowed the Fed to keep the taps open far longer than was wise, fueling an asset bubble at the end of the decade.
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