General Glut's Globblog: Another inflation post

General Glut's Globblog: Another inflation post: "I wonder, in fact, if contined Fed tightening combined with a drop in oil prices -- say to the low $50s/barrel -- might shake what little general inflation exists right now completely out of the economy."

uh-oh.

Why uh-oh? Deflation is a very, very bad thing. The very short version is that deflation makes savings, without investment, rewarding, so it is possible to have very sharp declines in consumption, investment and asset prices, as people hold on to their cash. It can be very unpleasant.