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Actually, under negative real growth rates you'd need not merely to avoid deflation, but to actively promote considerable inflation: What matters for the stability of the credit and contract network that underpins the  modern economy is continuous robust growth in nominal incomes. Which means that if an external constraint imposes negative real growth rates, then those must be compensated by inflation.

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Mon Nov 18th, 2013 at 10:05:43 AM EST
Yes, and this is where I threw two ideas, either raising the minimum wage very strongly each year, or simply crediting money on an equal basis until the desired inflation is achieved. Each year.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi
by Cyrille (cyrillev domain yahoo.fr) on Mon Nov 18th, 2013 at 06:16:34 PM EST
[ Parent ]
It is because of the instinctive revulsion that wealthy elites exhibit to either of the two above solutions to deflation that I fear that we will yet be plunged into a debt deflation death spiral. There may well be a limit to the ability to save people from themselves.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Mon Nov 18th, 2013 at 08:42:09 PM EST
[ Parent ]


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