Quote

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.

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.

The real problem is deflation. That is the opposite of inflation but equally serious to the borrower.

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.

Deflation is defined as a general decline in prices, with emphasis on the word 'general.'

To face deflation, you have to have people accepting it and not reacting to it.

When people begin anticipating inflation, it doesn't do you any good anymore, because any benefit of inflation comes from the fact that you do better than you thought you were going to do.

Production is the only answer to inflation.

I have said repeatedly that the way to sustainable growth is to bring down inflation to much more reasonable levels.

Inflation is lower and more stable and the real business cycle fluctuations are more modest.