Sunday, October 14, 2012  Keynes and debt deflation  LK has a
passage from Keynes that makes the point I made the other day in
response to Garrett Jones's post on Fisher that while Fisher
wrote a great article, debt deflation was widely known in 1923
by Keynes and certainly before him as well. Most Keynesians
think of Fisher as one of their guys for good reason.     1. I
have to note a minor objection that Keynes in the quoted passage
describes the effects of deflation that are generally harmful
for the economy. Fisher (1932, 1933), on the other hand,
describes a certain chain of events where distress selling,
falling prices of assets and rising real debts lead to the
downward spiral of the economy. It is not quite the same thing.
1. I agree. Keynes is not talking about debt deflation at all.
2. Roman P.        He doesn't exactly talk about how the sales
will lead to further falls in asset values (although the idea
that that is lost on him seems implausible to me), but he does
talk about people obse