The popular media and the monetary central planners frequently warn of the threatened dangers of “deflation” and the need for “activist” monetary policy to ward off its claimed harmful effects.
In a piece of mine on, “The Hubris of the Central Banker and the Ghosts of Deflation Past,” I explain the different meanings of “deflation” and their significance in the market from an “Austrian” point-of-view.
I then critically analyze how the monetary central planners — including Ben Bernanke — define “deflation,” and how their understanding is fundamentally wrong and their “”solutions” to any supposed deflationary “problem” would only lead to renewed instability, imbalance, and distortion of markets and prices.
The only real cure for the instabilities and imbalances generated during the boom-bust cycle is to eliminate the core cause. And that means abolishing central banking and returning to a free market-based monetary system no longer susceptible to the manipulations of the monetary central planners.