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Questioning “Good Deflation”

I hear the term “good deflation” being used more often, and frankly disagree with the economic analysis behind the term. It seems to me that deflation is a global experience, and is clearly not an expansionist term. Good deflation is one best described as minimal and bad deflation, of course, applies to higher deflation rates. The difference between the two is simply a matter of degree, and as such, one must ask whether there is a genuine difference. At what degree of deflation will the experience transition from good to bad? I submit that the difference may simply be determined by where a society is relative to the entire deflationary cycle, and we would best be advised to monitor deflation closely rather than bask in the temporary delight brought on by “good deflation.”

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Harlan J. Cadinha
Founder, Chairman and Chief Strategist




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