To: carranza2 who wrote (103702 ) 11/16/2013 5:43:20 PM From: TobagoJack Read Replies (3) | Respond to deflation may be good …zerohedge.com "Historically, there is no reason to fear deflation," Nobel Laureate Thomas Sargent explains to Germany's Wiwo.de , "we all benefit from lower prices." Crucially, he continues, "countries with declining prices, such as Greece, must improve the competitiveness they have lost in recent years," requiring falling wages and rising productivity (and falling unit labor costs) which will lead to companies cutting prices, "this is not a dangerous deflation, but part of the necessary correction so that these countries are internationally competitive again." That central banks pursue an inflation rate of around 2%, Sargent blasts, is because they consider it their job to "make bad debt good debt," adding that inflation is "a major redistribution machine - reducing the real debt burden for the benefit of creditors and devaluing the assets of the creditors." A return to a gold standard,he concludes, to prevent governments and central banks from limitless money-printing "would not be foolish."Wiwo.de ) dares to go there (and is likely about to be stripped of his Nobel)...Greece. They must make their price competitiveness, they have lost in recent years, again. This requires falling wages and rising productivity. As a result, unit labor costs go back, and the company may cut prices. This is not a dangerous deflation, but part of the necessary correction so that these countries are internationally competitive again, "Sargent said in an interview.Sargent "historically no reason to fear deflation." "We all benefit when technological progress lowers the prices, such as computers," said Sargent. central banks pursue an inflation rate of around two percent, according to Sargent is because they consider it their job to "make bad debt good debt". Of an inflation governments benefited with high debt."Inflation is a major redistribution machine, which reduces the real debt burden for the benefit of creditors and devalued the assets of the creditors." the gold standard, to prevent that governments and their central banks print money limitless. During this time the prices would indeed have fluctuated, but had compensated over the years.via Wiwo.de ),The ECB will continue to push the rate toward zero percent and then buy government bonds ," Polleit said. Background of this development are falling consumer prices in the euro-crisis countries and the resulting fear of deflation."You can defer the market-based adjustment of the credit boom of the past few years through lower interest rates and the printing of new money most, but not prevent ," said Polleit. In the medium term there is no way to lead a massive correction, coupled with cuts and debt deflation."The longer you postpone this process, the more destructive is its effect."
