Debt Deflation

Debt deflation is a theory of economic cycles, which holds that recessions and depressions are due to the overall level of debt shrinking (deflating): the credit cycle is the cause of the economic cycle.

The theory was developed by Irving Fisher following the Wall Street Crash of 1929 and the ensuing Great Depression. Debt deflation was largely ignored in favor of the ideas of John Maynard Keynes in Keynesian economics, but has enjoyed a resurgence of interest since the 1980s, both in mainstream economics and in the heterodox school of Post-Keynesian economics, and has subsequently been developed by such Post-Keynesian economists as Hyman Minsky "The Financial Instability Hypothesis"(1992) ] and Steve Keen.

Read more about Debt DeflationFisher's Formulation, Subsequent Developments, Mainstream Interest, Similar Theories, Solutions, Forward Year Tax Receipts

Other articles related to "debt deflation, debt, deflation":

Irving Fisher
... neoclassical economists, though his later work on debt deflation has been embraced by the Post-Keynesian school ... that the stock market had reached "a permanently high plateau." His subsequent theory of debt deflation as an explanation of the Great Depression. 1950s and more widely due to an increased interest in debt deflation after the late-2000s recession ...
Irving Fisher - Economic Theories - Debt-deflation
... Further information Debt deflation Following the stock market crash of 1929, and in light of the ensuing Great Depression, Fisher developed a theory of ... bubble unleashes a series of effects that have serious negative impact on the real economy Debt liquidation and distress selling ... in nominal interest rates and a rise in deflation-adjusted interest rates ...
Debt Deflation - Forward Year Tax Receipts
... Recognizing that the federal government issues liabilites (debt) in its own currency and thus can never go bankrupt, another solution is for the federal government to become more like the corporate capital ... Like government debt issuance, forward year tax receipts have a rate of appreciation and a duration ... Unlike, government debt, the rate of return is not guaranteed ...
Steve Keen - Financial Instability and Debt Deflation
... financial instability hypothesis and Irving Fisher's debt deflation ... The hypothesis predicts that an overly large debt to GDP ratio can cause deflation and depression ... of the price level results in a continually rising real quantity of outstanding debt ...

Famous quotes containing the word debt:

    I have been told, that in some public discourses of mine my reverence for the intellect has made me unjustly cold to the personal relations. But now I almost shrink at the remembrance of such disparaging words. For persons are love’s world, and the coldest philosopher cannot recount the debt of the young soul wandering here in nature to the power of love, without being tempted to unsay, as treasonable to nature, aught derogatory to the social instincts.
    Ralph Waldo Emerson (1803–1882)