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Good and bad deflation - and horribly low euro zone M3 growth

Good and bad deflation - and horribly low euro zone M3 growth

I had an up-ed in today's edition of the Danish Business daily Børsen. Here is the English translation:

A scary story: The Zero Lower Bound and exchange rate dynamics

A scary story: The Zero Lower Bound and exchange rate dynamics

I was in Sweden last week and again yesterday (today I am in Norway). My trips to Sweden have once again reminded me about the dangers of conducting monetary policy with interest rates at the Zero Lower Bound (ZLB). The Swedish central bank - Riksbanken - has cut is key policy rate to 1% and is like to cut it further to 0.75% before the end of the year so we are inching closer and closer to zero.

The Crowd: "Lars, you are fat!"

The Crowd: "Lars, you are fat!"

On Friday I was doing a presentation on the global economy (yes, yes mainly on global monetary policy) for 40-50 colleagues who are working as investment advisors in the Danske Bank group.

Deflation - not hyperinflation - brought Hitler to power
Venezuela's monetary craziness

Venezuela's monetary craziness

Yesterday I wrote a post about how we are inching closer and closer to outright deflation in Europe. However, for other countries the risk of deflation is not the issue. In Argentina and Venezuela outright hyperinflation is becoming more and more likely.

Venezuela Frenzied Shopping

Venezuela Frenzied Shopping

A man carries his newly purchased television outside an appliance store in Caracas, Venezuela, Monday, Nov. 11, 2013. President Nicolas Maduro seized control of a nationwide chain of appliance stores Friday seeking to battle inflation and shortages. Shoppers were still arriving Monday to join the hundreds who began amassing over the weekend after price inspectors said they found evidence of "usury" and Maduro ordered the chain Tiendas Daka "occupation." (AP Photo/Ariana Cubillos)

Tick tock...here comes the Zero Lower Bound again

Tick tock...here comes the Zero Lower Bound again

This week have brought even more confirmation that we are still basically in a deflationary world - particularly in Europe. Hence, inflation numbers for October in a number of European countries published this week confirm that that inflation is declining markedly and that we now very close to outright deflation in a number of countries. Just take the case of the Czech Republic where the so-called monetary policy relevant inflation dropped to 0.1% y/y in October or even worse Sweden where we now have outright deflation - Swedish consumer prices dropped by 0.1% in October compared to a year ago.

CNB should move to LEVEL targeting

CNB should move to LEVEL targeting

The readers of my blog will know that I am very supportive of the latest actions from the Czech central bank (CNB) to start to use the exchange rate as a policy instrument given the fact that interest rates effectively are stuck at the Zero Lower Bound.

Miroslav "McCallum" Singer finally acts

Miroslav "McCallum" Singer finally acts

Yesterday the global market focus not surprisingly mostly was on the ECB's surprise 25bp refi rate cut. However, from a monetary policy perspective something a lot more interesting happened in the Czech Republic. Hence, yesterday in connection with its monthly board meeting the Czech central bank (CNB) made the following statement:

Let me say it again - the euro zone is heading for deflation

Let me say it again - the euro zone is heading for deflation

Ambrose Evans-Pritchard at the Telegraph quotes me on the risk of deflation in the euro zone:

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