Deflation- Feeling down - The Economist - Deflation Feeling down Deflation can be a good thing But todays version is pernicious Feb 21st 2015 | From the

Deflation- Feeling down - The Economist - Deflation Feeling...

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DeflationFeeling downDeflation can be a good thing. But today’s version is perniciousFeb 21st 2015 | From the print editionFALLING prices sound likesomething to cheer. In 1950talk was not cheap. It cost$3.70 to place a five-minutecall between New York andSan Francisco—or $36.35 intoday’s money. Now thatsame call costs you nothing.The emergence of thesharing economy is drivingdown the price of a taxi rideand a bed for the night.More recently tumblingprices for natural resources,especially oil, have boostedthe spending power ofconsumers from Detroit toDelhi. Mark Carney, the governor of the Bank of England, reckons that falling energy prices are“unambiguously good” for the British economy. Mr Carney is not wrong. Nonetheless, the world isgrievously underestimating the danger of deflation.The problem is that aggregate prices are dipping in so many places at once. Deflationary pressuresare visible far beyond food and energy, and in countries that cannot claim to be leading the chargetowards the new economy. In the euro zone, where deflation grips tightest, consumer prices fell by0.6% in the year to January; Germany, Italy and Spain all saw falls. Prices in Greece have been

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