Is Europe’s Central Bank Finally Getting Worried About Deflation?

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Brad DeLong notes that Mario Draghi, the head of Europe’s central bank, went off text in his speech at Jackson Hole. Here’s his summary of Draghi’s extended ad-lib:

The speech text says:

  1. The ECB knows that inflation has declined.
  2. The decline in inflation has not led to any decline in expectations of inflation.
  3. THE ECB will, if necessary, within its mandate, use QE and other policies to keep expectations of inflation from declining.

The speech as delivered says:

  1. The ECB knows that inflation has declined.
  2. My usual line is that the decline in inflation is due to temporary factors that will be reversed.
  3. That explanation is now long in the tooth: the longer “temporary” lasts the greater the danger.
  4. In fact, it is too late to “safeguard the firm anchoring of inflation expectations”.
  5. Inflationary expectations have already declined.
  6. We will use all the tools we have to reverse this.

Is this deviation a mere line wobble….Is this deviation an audience effect….Or does it signal a recognition on Draghi’s part that the Eurozone is heading for a triple dip, and that if he doesn’t assemble a coalition to do much more very quickly to boost aggregate demand we will have to change the name “The Great Recession” to something including the D-word, and he will go down in history as the worst central banker since the 1930s?

I would like to know…

I suppose we’d all like to know. The Germans better start taking this stuff seriously pretty soon. They can’t stick their heads in the sand and live in the past forever.

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SIX TRUTHS

Reclaiming power from those who abuse it often starts with telling the truth. And in "This Is How Authoritarians Get Defeated," MoJo's Monika Bauerlein unpacks six truths to remember during the homestretch of an election where democracy, truth, and decency are on the line.

Truth #1: The chaos is the point.

Truth #2: Team Reality is bigger than it seems.

Truth #3: Facebook owns this.

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Truth #5: It's about minority rule.

Truth #6: The only thing that can save us is…us.

Please take a moment to see how all these truths add up, because what happens in the weeks and months ahead will reverberate for at least a generation and we better be prepared.

And if you think journalism like Mother Jones'—that calls it like it is, that will never acquiesce to power, that looks where others don't—can help guide us through this historic, high-stakes moment, and you're able to right now, please help us reach our $350,000 goal by October 31 with a donation today. It's all hands on deck for democracy.

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