It is perhaps more of a surprise that his discussion seems to have been somewhat forgotten afterwards. As recently as in the early 1990s, conventional wisdom appears to have been “keep prices stable and you will minimize the danger of a financial crisis”. After several financial crises, and in particular with the Japanese experience in mind, few would subscribe to this view.
We have learned that it is not only movements in the general price level that matter, but also movements in a specific class of prices, namely asset prices. The example of Japan shows that the price stability of the late 1980s was not sufficient to ensure financial stability in the decade that followed. Conversely, financial instability can lead to price instability, in particular deflation.