The EU authorities would do well to study Professor Irving Fisher's seminal paper from Econometrica in 1933, The Debt Deflation Theory of Great Depressions. The central argument should by now be self-evident, though a certain sort of mind had trouble grasping it then, just as it does today. If the price level is falling - the "swelling dollar" in Hoover's America - the real burden of the debt keeps rising. Deflation may seem relatively benign in "low-debt" countries at certain times, though less benign than claimed by a rentier class that lives off coupons. People forget that it was a major cause of the American ... (full story)