Central bankers justify ultra-low interest rates on the grounds they help to stave off deflation. One of the well-known consequences of deflation is that corporate profits become depressed. This happens because wages tend to fall more slowly than other prices.

By the same token, mild deflation boosts the purchasing power of incomes. As economist Alfred Marshall pointed out, a fall in the price level “tends almost imperceptibly to establish a […]

Previous article
Next articleHow will Brexit affect trade?