Why fight: recession, inflation ... or maybe deflation? The economic crisis has brought an issue that has long been a central banks did not ask - about what to do if the country's falling prices. This question has arisen only in 2009.

In 2008, the world shuddered not only from the collapse of financial giants and the dizzying falls in equity markets, but also from increasing inflation. The food crisis which along with the mortgage, inflated food prices coincided also with a record increase in energy prices. Theoretically, the recession would have put an end to all these price turns. But the practice was much more intricate.

On the one hand, the price fluctuation in the ground, increasingly - below him, seized most of Old Europe, several CEE countries, the United States, as well as Japan, China and some Asian countries. In general, for the year from July 2008 to July 2009 are the prices in OECD countries fell by 0,6%. Moreover, even in Russia, with its double-digit inflation of non-European sizes is expected to slow price growth. For example, the forecast Ministry of Economic Development - 11,6-12%, which is lower than in 2008 (14.1%). But this forecast is somewhat overstated. Inflation is reduced, - the head of the Bank of Russia Sergei Ignatiev, the State Duma on September 16. - And, in my opinion, it may decline even faster than provide forecasts Ministry of Economic Development.

On the other hand, deflation has spread only on the sector of non-food goods and services sector, while food and energy prices going through the rise in price. True, the summer food become cheaper because of seasonal factors, but with the onset of cold weather is expected to return to spring trend: there is a heated and increasingly expensive, everything else - everything is cheaper.

But this dual position of the economy brought themselves monetary regulators together with governments, pushing the economy towards inflation. First of all, directly - pumping up market liquidity, it creates a problem when the amount of money in the hands of the population is growing faster than production of goods and services that that money can buy. That is, inflation of demand. But they have provoked a rise in prices and indirectly. Selling a huge amount of debt securities, the government caused the depreciation of many currencies in relation to other assets, which leads to inflation. And because of the threat of this new leap - from deflation to the back of inflation - rose sharply today, the question: is not it time to stop rampant fiscal and monetary stimulus? Responses of central banks on this issue were mixed.
 

Sooner or later

No one has yet completely ceased stimulate the economy. But emerging from recession, Germany and France in favor of curtailing anti-crisis measures. They even know how to reverse the effects of state aid will be markets. Think over all, including the elimination of the economy way too much money. They absolutely do not support the United States, Britain and the BRIC countries. Washington believe that to turn off anti-crisis policy early because of the instability of this tiny economic growth. But many experts believe that it's time. Analysts of investment company 36 South Investment Managers Ltd. believe that low inflation in the U.S. will not last long. They predict a jump in prices in 2011 and recommend that States use the time to curb inflation, which the foundation was laid in recent months.

But to prevent the rise in prices by monetary means the U.S. Federal Reserve is not considered necessary. Due to the substantial economic sluggishness and the pressure of inflation, monetary policy will continue to focus on promoting economic recovery, - said the Fed chairman, Ben Bernanke, speaking before Congress with semi-annual report on monetary policy. However, Bernanke believes the Fed will raise rates even under conditions of flooding of the financial system in cash. And yet enough to prevent an inflationary problem of monetary policy. In Britain, the same reluctance to change monetary policy explain the fact that projected the Bank of England, where inflation remains below the target level of 2% over the next two years.

however, caution all those countries, you can understand. It costs the state to withdraw from the budget and monetary incentive too early - before the consumer demand is finally restored, and it runs the risk of return to deflation and recession. Like Japan in 1998-2000, or the United States in 1937-1939-x.

Elena Snezhko

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