The Debt Deflation Theory Of Great Depressions: The credit crunch today is not destroying capital but recognising that capital was destroyed by misallocation in the years of irrational exuberance. If that is so, then we are entering a spiral of debt deflation that will play out slowly for years to come. To understand how that works, we turn to Professor Irving Fisher of Yale (1933). NGDP Targeting: Some Questions - Wall Street Pit
NGDP Targeting: Some Questions Wall Street Pit This is, of course, a story that goes back at least to Irving Fisher (1933): The Debt-Deflation Theory of Great Depressions. I've always liked the Fisher story. And it obviously has an element of truth to it. But admitting this is different than ... |
