Economic Smack-Down: Inflation vs. Deflation

(MoneyWatch)  In today's "Reality Check," MoneyWatch Editor-in-Chief Eric Schurenberg and I discussed the economic smack-down of the moment: inflation vs. deflation.


Although most economists understand that a recession, especially one highlighted by significant deleveraging, is deflationary, the worry is that the massive government spending spree (trillions of dollars since Lehman's collapse) will lead to higher inflation down the line.

Perhaps one of the reasons that investors are stymied right now is that they are unsure which is the more likely outcome. Not to put too much pressure on all of us, but waves of inflation and deflation can last for many decades, so we'll be revisiting the battle in the weeks and months to come.