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Hyman Minsky elucidated paradoxical mechanism of modern money. Destruction and even evaporation of money are embedded in the very architecture of creation of money by its design. (Minsky's Non-Neutral Money)
CPI, asset prices (productive assets, real estate, land, etc.), securities prices, and commodity prices demonstrate different behaviours and cannot be managed at the same time by the conventional monetary policy alone. A successful monetary policy to control CPI can cause another problem with other price categories. Paradox is embedded in monetary policy. (Monetary Policy Paradox)
Oligopoly producers conspire underproduction among themselves through collusion to raise price for their own benefit. Their own making of high price achieved during rising demand allows new entrants to establish their market presence. This leads to a new survival game to drive down the price. (Oligopoly Price Cycle 1)
Before WWI, there were frequent deflation: deflation and inflation alternated each other. Since WWII, deflation disappeared from UK. This article briefs the history of inflation/deflation in UK along the transformation in monetary arrangement. (Introduction of Deflation)
In our modern fiat money world, deflation is a villain. To contain inflation, central bank can increase interest rates; to tackle with deflation, central bank faces its limit in reducing interest rates. Negative nominal deposit rates can divide economic reality between deposits in bank accounts and money hoard at home. While deposits are charged with negative deposit rates, money hoarded at home is free from charge. It could pose a risk for reduction in saving balance at banks. Zero boundary is a constraint for deposit rates under fiat money. Digital money can be an alternative effective solution to apply negative interest rate universally without bank run risk. However, sovereign entity might not like the idea ... (Zero Boundary)
What can we learn from historical cases of deflation? 1874-97 deflation in UK was accompanied with high unemployment, international monetary integration, international productivity convergence, and development of cheaper foreign labour market. Can we see any parallel with the deflationary environment of our time? (Anecdote 1874-97)
Can innovation cause economic contraction? Innovation and its productivity gain can trigger supply-driven deflation, which increases output. However, what would it be, if our jobs are overtaken by innovative technology? By accounting for net job loss, innovation can also indirectly trigger demand-driven deflation, which reduces consumption. This article explores negative economic impacts of innovation. (Deflationary Innovation)
