Deflation Fears

February 13, 1998 • Volume 8, Issue 6
Are falling prices a bigger threat than inflation?
By Christopher Conte


Traders at the Philippine Stock Exchange in Manila react to a selloff on Wall Street and Asian Markets on Oct. 28, 1997. (Photo Credit: Reuters)
Traders at the Philippine Stock Exchange in Manila react to a selloff on Wall Street and Asian Markets on Oct. 28, 1997. (Photo Credit: Reuters)

Just when Americans were ready to declare victory in the war against inflation, a new potential enemy has appeared: deflation. Some economists, citing both long-term changes in the global economy and the current economic crisis in Asia, warn that the U.S. faces a greater danger today that prices might fall uncontrollably than that they will start climbing again. Many economists dismiss such fears, and insist that inflation remains the greater hazard. But jitters over the continuing financial turmoil in Asia have led theoreticians and policy-makers to re-examine some basic assumptions about how the U.S. and global economies work. In particular, they wonder whether businesses and financial institutions are equipped to avert the problems that can arise from falling prices – including higher unemployment and bankruptcy.

ISSUE TRACKER for Related Reports
U.S. Dollar and Inflation
Jul. 19, 2019  The Future of Cash
Oct. 2008  The Troubled Dollar
Feb. 13, 1998  Deflation Fears
Mar. 13, 1987  Dollar Diplomacy
Oct. 14, 1983  Strong Dollar's Return
Jul. 11, 1980  Coping with Inflation
May 16, 1980  Measuring Inflation
Dec. 07, 1979  Federal Reserve's Inflation Fight
Jun. 09, 1978  Dollar Problems Abroad
Sep. 20, 1974  Inflation and Job Security
Feb. 26, 1969  Money Supply in Inflation
Feb. 14, 1968  Gold Policies and Production
Dec. 15, 1965  Anti-Inflation Policies in America and Britain
Mar. 15, 1965  World Monetary Reform
Dec. 02, 1964  Silver and the Coin Shortage
Oct. 17, 1962  Gold Stock and the Balance of Payments
Dec. 15, 1960  Gold and the Dollar
Oct. 10, 1956  Old-Age Annuities in Time of Inflation
Jan. 17, 1951  Credit Control in Inflation
Aug. 10, 1949  Dollar Shortage
Oct. 04, 1943  Stabilization of Exchanges
Jan. 21, 1941  Safeguards Against Monetary Inflation
Mar. 25, 1940  United States Gold in International Relations
Dec. 14, 1937  Four Years of the Silver Program
Oct. 04, 1934  Inflation in Europe and the United States
Jan. 30, 1934  Dollar Depreciation and Devaluation
Sep. 05, 1933  Stabilization of the Dollar
May 29, 1933  Invalidation of the Gold Clause
Mar. 15, 1933  Inflation of the Currency
Oct. 25, 1924  Bank Rate and Credit Control Federal Reserve Policies and the Defaltion Issue
Economic Analyses, Forecasts, and Statistics