Debt deflation is a theory of economic cycles, which holds that recessions and depressions are due to the overall level of debt shrinking (deflating): the credit cycle is the cause of the economic cycle.
The theory was developed by Irving Fisher following the Wall Street Crash of 1929 and the ensuing Great Depression. Debt deflation was largely ignored in favor of the ideas of John Maynard Keynes in Keynesian economics, but has enjoyed a resurgence of interest since the 1980s, both in mainstream economics and in the heterodox school of Post-Keynesian economics, and has subsequently been developed by such Post-Keynesian economists as Hyman Minsky "The Financial Instability Hypothesis"(1992) ] and Steve Keen.
Read more about Debt Deflation: Fisher's Formulation, Subsequent Developments, Mainstream Interest, Similar Theories, Solutions, Forward Year Tax Receipts
Famous quotes containing the word debt:
“They who have been bred in the school of politics fail now and always to face the facts. Their measures are half measures and makeshifts merely. They put off the day of settlement, and meanwhile the debt accumulates.”
—Henry David Thoreau (1817–1862)