I answered: >>they did in 1930.<<
Saith Doug: > Can we draw any conclusions from that experience relevant to today?<
the question is: why would they want deflation now? you'd think that they had learned some lessons from 1929-33. Also, they're held more responsible to the state managers than they used to be. Deflation wouldn't help the latter get reelected.
maybe they want deflation because they are basically monetarists, believing that falling prices cause the economy to equilibrate. And maybe they're more independent than I just said they are. And maybe they're crazy with power.
Jim Devine jdevine at popmail.lmu.edu & http://clawww.lmu.edu/Departments/ECON/jdevine.html