Is Price Deflation a Possibility in the Near US Future?

Those of us who experienced the destructive effects of monetary inflation have the reason to be surprised when pro-free market think tanks appear to defend easy money policies.    This new piece by John H. Makin, Beware The Monetary Cliff from AEI, does just that.  His fears:

• Over the past two years, inflation rates in the US, Europe, and China have drifted steadily lower while Japan’s inflation rate has recovered only modestly.
• If deflation occurs, real wages will rise even faster, and, and employment growth will be weaker.
• Fed Chairman Bernanke and soon-to-be chairman Yellen should make avoiding deflation a more clearly stated Fed objective.
  

I could come with a much longer litany with my fears of the impact of the political manipulation of monetary policy.   I recommend again the piece by Allan Meltzer, current president of the Mont Pelerin Society, about why inflation remains low http://www.soundmoneyproject.org/?p=9187  .    Many more economies and societies have suffered the consequences of inflation than deflation and I see more signs of new bubbles than of crumbling prices.

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