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Deflation - Worse Than Inflation For Your Business Business Articles | November 9 Black Terry McLaurin Jersey , 2008
Deflation, much worse than recession, is becoming a real danger to your business. Governments cannot come to the help of businesses. You are responsible for the survival of your firm in tough times. You need to look to providing ever better goods and services at the lowest possible cost Black Montez Sweat Jersey , so as to gain the ongoing support of your customers through customer engagement, starting today.


Deflation -far more dangerous than inflation - is becoming a very real danger to your business. Central Banks traditionally believe that printing money cures deflation by increasing inflation - an over-application of Keynesian economics. But does history support this view?


The Japanese experience suggests that the "printing money" approach does not work - neither do zero interest rates cure the problem. The cost of deflation to the Japanese economy was a decade of stunted activity and more than 16 percent of the value of GDP. There is hope that different actions can be used to good effect for, when Sweden faced the same problem their prompt and effective action reduced the cost to three percent of GDP and shortened the length to three years. Even that three percent is expensive; so you have to face the question about how you and your company can tackle the perils of deflation when everyone else has cut prices and haemorrhages money?"?"


Business needs to grow - most of the time. When that need disappeared twice in the past century we faced the two deepest Black Dwayne Haskins Jersey , longest slumps in recent history.


In recent years Governments, Central Banks and committees of economists have concentrated almost exclusively on manipulating interest rates in order to balance the perceived priority of controlling inflation. The Bank of England has to all intents and purposes done little other than attempt to minimise inflation until the "credit crunch", and the danger of a collapse of the banking sector Black Da'Ron Payne Jersey , became the priority.


Currently a new economic situation is being fought using the same old tools. It may become obvious that those old tools, being applied to the current unusual circumstances, have the utility of a rubber adjustable spanner.


And then...


Governments and Central Banks gamble that falling demand will lead to falling prices and have cut interest rates to kick start economic activity through a return to inter-bank lending. So far the output is Black Landon Collins Jersey , to say the least, discouraging - and the outlook is not good either.


Many banks continue to distrust each other as they suspect that others have been as underhand or foolish as they have and may not be able to repay loans any more than they can. Many have taken government money to add liquidity to their balance sheets and reduce the hidden debts that sooner or later they will need to confess. Some have even taken the opportunity to continue to pay massive and undeserved bonuses to those that have destroyed stockholder value.


At least one major insurance company has taken government money and splurged it on a jamboree for executives and salespeople leaving a bemused North American administration asking how it is that an injection of capital that the recipient claimed that they did