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Deflation

By Matthew Yglesias

"Deflation"

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Bad: “The price of a variety of goods, everything from rent to cigarettes, rose 0.2 percent in January. Excluding food and fuel costs, which tend to be volatile, prices fell 0.1 percent — the first decrease since 1982.”

My prediction is that since developing countries are still growing, we’re in for a period when food and energy costs will keep going up even as core inflation remains near-zero or even negative. As a result, developed country central bankers are going to suddenly stop caring about core inflation and start using rising energy costs as a reason to inflict contractionary policies on the population.

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