An Economist Explains In Simple Terms Why Deflation Is Dangerous

If you're living in Europe, deflation is already here. Deflation means that inflation is plunging, so prices are dropping.

So what's the big issue? If rising prices (inflation) are generally considered a bad thing, then shouldn't falling prices (deflation) be a good thing?

Well, yes and no.

Economics professor Ed Dolan is on hand with an easy-to-understand presentation (no economics degree needed), showing the circumstances in which deflation can be a good and bad thing.

We've republished the slideshow with Dolan's permission here, and you can check out more fantastic economics presentations over at his blog.