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The Deflation Factor


Harvard’s Greg Mankiw makes a crucial point about the financial turmoil.

Harvard economist Greg Mankiw, a visiting scholar at the American Enterprise Institute, makes a crucial distinction between the current financial turmoil and the crisis of the Great Depression: “Deflation was a large part of the story of the 1930s, and that does not seem like a significant risk today.” Mankiw goes on to quote “a relevant passage from my favorite intermediate macro textbook.” Read the whole post.