Economist Opinions Can be Far Apart

In the midst of a deep global recession bordering on a depression, almost as bad as that of the 1930s, we see government pump-priming and stimulus budget-busting that ordinarily will induce extraordinary inflation, in time.

However, depressions also bring on the threat of deflation when economies collapse. Once they collapse they are hard to revive. The question: What is the bigger threat?

Here is where some economists worry more about the more immediate deflation than they do further off inflation.

History tells us that deflation is a shorter-term problem. Only a minority of economists look at the deflationary possibility. Pursuing that possibility, you do have an excuse to spend and spend, sometimes quite recklessly. Moreover, it is too often used by those who only have short-term political purposes.

You might say, the American financial meltdown of 2008 and 2009 were sown in the early years of the 21^st century when the Fed worried a bit too much about deflation and then loosened funds too much as its remedy.

Long-term, many economists envision catastrophic inflation.