Leading deflationist Roger Bootle wrote a June 8 editorial for The Guardian offering his point of view as to why the Eurozone will soon face deflation.
The debt will continue to increase, unemployment will remain at these appallingly high levels and, unless something dramatic happens, the eurozone will slip towards deflation.
Bootle goes on to explain the implications of deflation, and why this is troublesome:
…deflation increases the debt burden. As prices fall, tax revenues fall, and the nominal value of the debt (and the interest paid to service it) remains the same. Just as inflation reduces the real value of the debt, so deflation increases it.
You can read the full article on the Guardian’s website: