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Inflation is not always the main problem, or indeed a problem at all. Sometimes, though rarely, deflation is a more serious threat, and we need to shelve many of the orthodoxies we have held so dear.

Deflation isn't good, and inflation is easier to cure than deflation.

Deflation can be particularly dangerous when a financial system is shaky, with household and corporate balance sheets in poor shape and banks undercapitalized and heavily burdened with bad loans.

The government will always tell you that it wants low inflation. The real issue is the horizon over which to bring inflation down.

Of course, looking tough on inflation is part of any central banker's job description: if investors believe that inflation is going to get out of control, you end up with higher interest rates and capital flight, and a vicious circle quickly ensues.

We know that advanced economies with stable governments that borrow in their own currency are capable of running up very high levels of debt without crisis.

The supply-side effect of a restrictive monetary policy is likely to be perverse, in that high interest rates enter into costs and thus exert inflationary pressure.

The problem is that the U.S. government is the biggest debtor in the world, and those depending on it to take care of them will only become poorer.

In the simplest terms, inflation occurs when there's too much money in the system. On the flip side, deflation occurs when there are too few dollars in circulation.

Worry is the interest paid by those who borrow trouble.