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Page B1 Ripples of Madoff's Fraud in Europe B1 DEFLATION UNLIKELY, DESPITE FEARS With prices dropping across the board, David Leonhardt writes that fears of deflation have risen with good reason.
"The fears of deflation can't quite be put to bed.
By talking up fears of deflation, Mr Greenspan encouraged people to pile into the bond market.
Reflecting growing fears of deflation, Treasury prices rose, with the 10-year yield hitting a 17-month low.
The concern over low inflation has raised fears of deflation — a sustained drop in wages and prices.
In the United States fears of deflation linger but most of Asia, except Japan, has the opposite concerns.
Similar(24)
Fear of deflation has loomed before.
"It's gone from one extreme to the other," meaning from fear of deflation to fear of rapid inflation.
"There is the war premium; there is fear of deflation and there are investors fleeing from the stock market".
But when credit restarts, the fear of deflation will be replaced by fear of inflation, and there will be pressure for interest rates to rise".
"I think the fear of deflation in and of itself is probably overblown," Charles I. Plosser, president of the Philadelphia Fed, said last week.
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