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deflation crisis japan

Asset prices and prices are falling rapidly as the impact of globalization credit permeates the global economy. Newspaper columnists are beginning to warn against the dangers of deflation.

What happens during deflation?

It’s important to understand that what happens during deflation is not a result of deflation itself. Rather, deflation itself and what happens during deflation are results of the same cause: a change in mass social mood.

Beyond the price effects of deflation, what happens during deflation can fill entire books. In his two-book set, Socionomics: The Science of History and Social Prediction, Robert Prechter dedicated several sections to what happens during deflation. The topic of what happens during deflation also inspired Prechter’s best-seller Conquer the Crash.

Deflation Threat? What Deflation Threat?
By Howestreet

The deflation “recognition phase” has finally arrived. Kroger foods, Costco, and Walmart are blaming deflation for a drop in earnings. Moreover, many high profile names are discussing deflation, something most thought could never happen.

Here’s what famed economist Joseph Stiglitz says about deflation:

The U.S. faces the possibility of deflation for the first time since the Eisenhower administration, a threat that may prompt the Federal Reserve to keep interest rates near zero through next year.

Executives at Kroger Co., the largest U.S. supermarket chain, blamed deflation for a 7 percent drop in earnings in the second quarter, while falling prices for food, gasoline, and electronics left August sales unchanged at Costco Wholesale Corp. A sustained price drop might set off a chain reaction in which lower profits force employers to pare wages and payrolls. That would erode consumer demand, exacerbating wage cuts and firings.

“Deflation is definitely a threat right now,” Nobel laureate Joseph Stiglitz, 66, a professor at Columbia University in New York, said in a Sept. 22 interview. “The combination of the deflation threat and the sluggish recovery should keep the Fed on hold for quite a while.”

Original article by Howestreet’s Mish

Deflation taking root in global economies

By Brian Milner, Globe And mail

Fuelled by overcapacity, shrinking credit, reduced corporate spending and falling consumer demand, deflation is on the rise

Fuelled by continuing overcapacity, shrinking credit, reduced corporate spending and falling consumer demand, deflation is on the rise in its old stomping ground of Japan and taking root in the battered U.S. and European economies.

Consumer prices fell at their fastest clip ever last month in Japan, which has been fighting a losing war against deflation for much of the past two decades. Germany, Europe’s biggest economy, has now suffered through four consecutive months of sliding prices, and the rest of the region that uses the euro is not faring much better.

Original article By Brian Milner, Globe and mail

Japanese Deflation Is Unstoppable

By Vincent Fernando of Business Insider

Japanese deflation is accelerating. Consumer prices ex-food fell a whopping 2.4% in August, the largest decline ever since records began in 1971.

This beat even July’s previous record-breaking 2.2% drop. It was the sixth consecutive month of declines.

Even after stripping out both food and energy, prices still fell 0.9% year over year, as they did in July. This is one of the largest drops on record, only surpassed by a few months during 2001.

Read the official release here.

Original article by Vincent Fernando at Business Insider

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  1. Drastic deflation in housing prices coming: analystsWhat goes up must come down, and what we’re about to experience in the USA is the worst fallout because houses in the country are approximately double the historical average,...
  2. Chinese Juggernaut Gaining On Japan: NYTimesFor years, Japan has been readying itself for the day that it is eclipsed economically by China. But as a result of the global slowdown, Japan’s difficulty in managing its...
  3. Inflation or deflation? Eventually it’s the former no matter whatFor people who so-called predicted this downturn (probably predicted it 1 year ago), they certainly are missing the real threat. No it’s no inflation, it’s deflation. Ever wonder why the...
  4. 4 sure signs that deflation is here for yearsHere’s a real unconventional idea. Have economic policy that allow for the wealth of the nation to be accessible to all who work. Instead of the present unidirectional movement of...
  5. Deflation coming because ‘lack of guts’ to China“The government is not helpless here, Morici says. We should be standing up to China by installing our own currency peg and making the dollar cheaper relatively to China’s yuan....
  6. Inflation is not a threat; deflation is“Inflation is the number one threat to the US economy? Ask the mainstream experts, and this statement is in no way a fabrication of the truth; it is truth itself.”...

This entry was posted on Monday, October 5th, 2009 at 9:28 pm and is filed under Eurasia. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

2 Comments

  1. April 19, 2010 @ 9:44 pm


    Shikata ganai desu yo! Nihon no keizai wa totemo waruii desu ne!!

    Ima wa zembu wa totemo abunai desu ne.

    Sepuku Sepuku Sepuku

    Posted by JJ
  2. July 9, 2010 @ 8:41 am


    what the h was that JJ?

    Deflation in fact is good for the economy.. Those are against it are nothing but greedy for profit ppl ~

    Posted by Mark

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