According to this argument, a higher inflation objective makes it less likely that the economy may get trapped in a destructive debt-deflation spiral of the type described by Irving Fisher. In the midst of the Great Depression, Fisher put forward a theory of economic crises that centred on the mutually reinforcing effects between over-indebtedness and deflation.
5 According to this view, over-indebtedness beyond some point triggers distressed asset sales as debt is called in. This leads to abrupt deleveraging and a contraction of the amount of money in circulation. The destruction of money precipitates a fall in the general price level.