How to Beat the Deflation Spiral

(Wall Street Journal) — The markets are signaling that a bout of deflation may be coming. Many economists still dismiss the threat. But if they are wrong, and deflation does set in, what would it mean for stocks, bonds, gold and other investments? The last time deflation fears gripped the markets was in 2003, when the economy was recovering slowly from the dot-com recession. The worries of a sustained fall in prices across the economy turned out to be overblown as growth snapped back, prices for oil and other commodities jumped, and inflation rose enough for the Federal Reserve to begin tapping on the monetary brakes in 2004.

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