Disinflation, or falling inflation, can turn into deflation, particularly when inflation rates are already very low.
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China, for the last number of years, has imported, first of all, deflation, low inflation and disinflation.
But such a cataclysmic prospect could also encourage the present government to keep the disinflation programme afloat.
For all the financial disruption, the worst fallout from a collapse of the disinflation programme would be political, not economic.
The higher cost of financing its debt will hit the government's deficit targets, another critical component of the disinflation programme.
When some countries are barely growing, there is a risk that this emphasis on disinflation could push them towards deflation.
In the end central bankers have gotten it mostly right over the last two decades, with disinflation and general prosperity the result.
That sector can then pump out goods that are dumped on global markets, frequently at below economic cost, thereby intensifying global disinflation.
The mathematically inclined, inflation has three sub variables: inflation, deflation, and disinflation.
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Disinflation, not deflation, could be the likely scenario facing the U.S. economy.
The twin decades of disinflation bred convergence among economies and financial markets.
The record suggests that further disinflation from the comparatively low level of the 2000s will push stock prices lower over the next decade.
If China was a source of global disinflation in the past decades, it will become a source of global inflation in the next decade.
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Achieving that objective would represent disinflation from an already low rate (2.6% in the 2000s), something that has been associated historically with declining stock prices.
If anything, the disinflation programme has been a victim of its own success: inflation and interest rates fell so sharply last year that the economy boomed.
Sounds like a virtuous cycle: Technology leads to productivity, leads to low prices, leads to disinflation, leads to booming capital markets, leads to more funded technology.
It was also pointed out that, even absent further disinflation, continued low inflation might pose a threat to the economic recovery by, for example, raising debt burdens.
Turks view the disinflation programme as part and parcel of a hoped-for transition from an introverted, statist and authoritarian past to a liberal, democratic and cosmopolitan future.
The drop in euro-zone inflation will be largely caused by disinflation in the peripheral economies, where fiscal austerity and a credit crunch will squeeze wages and prices.
While excessive disinflation can lead to deflation, it also gives Bernanke maneuvering room if he wanted to unleash further monetary stimulus in the form of quantitative easing.
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But the main cause of global disinflation is increased competition.
Throughout 2001 America's producers were cowed by inventory buildups and a cost of borrowing that was in truth much higher than interest rates denoted, thanks to a severe disinflation.
With disinflation possibly turning into deflation, Fed Chairman Ben Bernanke could be forced to unleash QE3 in coming months to combat falling prices and possibly a slowing economy that could be slipping into recession.
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Yet this process could prove to be more drawn out than previously expected, and that sector of the economy is likely to see a very slow pace of disinflation in service prices, despite overall hiring cooling fast.
But not this Federal Reserve, which has a strong bias toward disinflation and many of whose members seem to have had to be dragged, kicking and screaming, into the insufficient amount of easing we have had to date.
That resistance might already be waning, though, with Kocherlakota giving a speech on Tuesday, just before the minutes were released, in which he noted disinflation could be around the corner and further policy accommodation would be helpful in that scenario. (Read Risky Business: Bernanke Fed Should Buy More MBS).
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