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This in turn increases the intensity of the deflationary process.
A similarly harsh deflationary process is now under way in peripheral euro-zone countries like Greece.
SINCE the bursting of Japan's asset bubbles in the early 1990s, the country has undergone a long and deflationary process of debt reduction.
Second, deficit countries would be able to reestablish their international competitiveness without going through the painful deflationary process required by the old gold standard and without facing the political embarrassment of abandoning an established par value.
The difficulties to bring down the public debt value and to improve the fiscal performance in the Eurozone's periphery, in addition to the undergoing deflationary process, have also resulted from the introduction of the common currency and the macroeconomic policy changes brought about by it.
Ray Dalio, the company's founder, began using the term "d-process" in February 2009, to describe the deleveraging and deflationary process of the subprime mortgage industry as distinct from a recession.
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When the Great Depression came after 1929, these deflationary processes were accentuated, although the government increased spending on building roads and on welfare in order to provide employment.
South Korea, some worry, may have to go through the same deflationary restructuring process from which Japan has suffered.
So they intervene.I have called this process "pass the deflationary parcel" in the past, a term that probably needs more explanation.
Bottom line for all of this, until housing inventories get worked off (which they eventually will) and credit markets begin to function properly again (which they also will too), we will be heading into a deflationary environment as the de-leveraging process for both business and consumers could be more painful than expected.
Bottom line for all of this, until housing inventories get worked off (which they eventually will), and credit markets begin to function properly again (which they also will), we will be heading into a deflationary environment as the de-leveraging process for both business and consumers could be more painful than expected.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com