The basic prescription for preventing deflation is…
“The basic prescription for preventing deflation is therefore straightforward, at least in principle: Use monetary and fiscal policy as needed to support aggregate spending, in a manner as nearly consistent as possible with full utilization of economic resources and low and stable inflation. In other words, the best way to get out of trouble is not to get into it in the first place.”
About This Quote
This interpretation was drafted with AI assistance. It is one reading of the quote, not the author's own explanation.
Preventing deflation requires using monetary and fiscal tools to keep spending high while aiming for full resource use and stable low inflation.
In simple terms: Use policy to keep spending up and avoid deflation.
Key Takeaway
Maintain balanced policy to avoid trouble.
Themes
economics
inflation
policy
stability
Mood
cautious
analytical
Type
advisory
economic
When to use this quote
- central bank planning
- government budgeting
- business cycle management
- inflation targeting
Key Concepts
monetary policy
fiscal policy
aggregate demand
resource utilization
Questions to Reflect On
- How can policymakers balance growth and inflation?
- What risks arise from over‑stimulus?
A Different Perspective
Policy may be limited by political constraints and lagged effects.