Zeihan on Global Deflation vs Inflation

1 view

Skip to first unread message

Joe Leote

unread,

Mar 24, 2024, 12:30:33 PMMar 24

to Money Group

Peter Zeihan worries more about deflation than inflation:

Theoretically in a private-credit-driven economic boom inflation can persist indefinitely without interference from the government. But the credit system drives up the price of collateral, but also consumes good collateral, and the collateral can become saturated with debt. Debt inflation is called an asset price bubble and the subsequent collapse is the theory of debt deflation by Irving Fisher. I think both the 2008 financial crisis and the Covid crisis both would have produced harmful debt deflation without public stimulus and active public policy response.