Saturday 20 May 2017

Renaissance


An Educated Renaissance


1. Hans Holbein’s The Ambassadors, an icon of the Renaissance, yet only discovered in the 19th century. Its enigmatic sitters and objects offer a wealth of insights into the period.


                 

                What catches the eye as much as the gaze of both sitters is the table in the middle of the composition and the objects scattered across its upper and lower tiers. On the lower shelf are two books (a hymn book and a merchant’s arithmetic book), a lute, a terrestrial globe, a case of flutes, a set square, and a pair of dividers. The upper shelf contains a celestial globe, and several extremely specialized scientific instruments: quadrants, sundials, and a torquetum (and navigational aid). 


                 These objects represent the seven liberal arts that provided the basis of a Renaissance education. The three basic arts – grammar, logic, and rhetoric – were known as the trivium. They can be related to the activities of the two sitters. They are ambassadors, trained in the use of texts, but above all skilled in the art of argument and persuasion. The quadrivium referred to arithmetic, music, geometry, and astronomy, all of which are clearly represented in Holbein’s precise depiction of the arithmetic book, the lute, and the scientific instruments.



                 These academic subjects formed the basis of the studia humanitatis, the course of study followed by most young men of the period, more popularly known as humanism. Humanism represented a significant new development in late 14th- and 15th-century Europe that involved the study of the classical texts of Greek and Roman language, culture, politics, and philosophy. The highly flexible nature of the studia humanitatis encouraged the study of a variety of new disciplines that became central to Renaissance thought, such as classical philology, literature, history, and moral philosophy.



                 Holbein is showing that his sitters are themselves ‘New Men’, scholarly but worldly figures, utilizing their learning in pursuit of fame and ambition. The figure on the right is Jean de Dinteville, the French ambassador to the English court of Henry VIII. On the left is his close friend Georges de Selve, bishop of Lavaur.



                 The objects on the table are chosen to suggest that their positions in the worlds of politics and religion are closely connected to their understanding of humanist thinking. The painting implies that knowledge of the disciplines represented by these objects is crucial to worldly ambition and success.

The Darker Side of the Renaissance


                 Yet if we look even more closely at the objects in Holbein’s painting, they lead us to quite another version of the Renaissance. On the lower shelf one of the strings on the lute is broken, a symbol of discord. Next to the lute is an open hymn book, identifiable as the work of the religious reformer Martin Luther. On the right-hand edge of the painting, the curtain is slightly pulled back to reveal a silver crucifix. 

                 These objects draw our attention to religious debate and discord in the Renaissance. When Holbein painted it, Luther’s Protestant ideas were sweeping through Europe, defying the established authority of the Roman Catholic Church. The broken lute is a powerful symbol of the religious conflict characterized by Holbein in his juxtaposition of Lutheran hymn book and Catholic crucifix.Holbein’s Lutheran hymn book is quite clearly a printed book. The invention of printing in the latter half of the 15th century revolutionized the creation, distribution, and understanding of information and knowledge. 

                 Compared to the laborious and often inaccurate copying of manuscripts, printed books were circulated with a speed and accuracy and in quantities previously unimaginable. But the spread of new ideas in print, especially in religion, would also provoke instability, uncertainty, and anxiety, leading artists and thinkers to further question who they were and how they lived in a rapidly expanding world. This relationship between achievement and the anxiety it creates is one of the characteristic features of the Renaissance.

                 Next to Holbein’s Lutheran hymn book sits another printed book, which at first seems more mundane, but which offers another telling dimension of the Renaissance. The book is an instruction manual for merchants in how to calculate profit and loss. Its presence alongside the more ‘cultural’ objects in the painting shows that in the Renaissance business and finance were inextricably connected to culture and art. 

                 While the book alludes to the quadrivium of Renaissance humanist learning, it also points towards an awareness that the cultural achievements of the Renaissance were built on the success of the spheres of trade and finance. As the world grew in size and complexity, new mechanisms for understanding the increasingly invisible circulation of money and goods were required to maximize profit and minimize loss. The result was a renewed interest in disciplines like mathematics as a way of understanding the economics of a progressively global Renaissance world picture.

                 The terrestrial globe behind the merchant’s arithmetic book confirms the expansion of trade and finance as a defining feature of the Renaissance. The globe is one of the most important objects in the painting. Travel, exploration, and discovery were dynamic, controversial aspects of the Renaissance, and Holbein’s globe tells us this in its remarkably up-to-date representation of the world as it was perceived in 1533. Europe is labelled ‘Europa’. 

                 This is itself significant, as the 15th and 16th centuries were the point at which Europe began to be defined as possessing a common political and cultural identity. Prior to this people rarely called themselves ‘European’. Holbein also portrays the recent discoveries made through voyages in Africa and Asia, as well as in the ‘New World’ voyages of Christopher Columbus, begun in 1492, and Ferdinand Magellan’s first circumnavigation of the globe in 1522. These discoveries situated Europe in a rapidly expanding world, but also changed the continent’s relationship with the cultures and communities it encountered.As with the impact of the printing press, and the upheavals in religion, this global expansion bequeathed a double-edged legacy. One of the outcomes was the destruction of indigenous cultures and communities through war and disease, because they were unprepared for or uninterested in adopting European beliefs and ways of living. Along with the cultural, scientific, and technological achievements of the period came religious intolerance, political ignorance, slavery, and massive inequalities in wealth and status – what has been called ‘the darker side of the Renaissance’.

Where and When Was the Renaissance?

                 The Renaissance is usually associated with the Italian city states like Florence, but Italy’s undoubted importance has too often overshadowed the development of new ideas in northern Europe, the Iberian peninsula, the Islamic world, south-east Asia, and Africa. In offering a more global perspective on the nature of the Renaissance, it would be more accurate to refer to a series of ‘Renaissances’ throughout these regions, each with their own highly specific and separate characteristics.These other Renaissances often overlapped and exchanged influences with the more classical and traditionally understood Renaissance centred on Italy. The Renaissance was a remarkably international, fluid, and mobile phenomenon.

                 Today, there is a popular consensus that the term ‘Renaissance’ refers to a profound and enduring upheaval and transformation in culture, politics, art, and society in Europe between the years 1400 and 1600. The word describes both a period in history and a more general ideal of cultural renewal. The term comes from the French for ‘rebirth’. Since the 9th century it has been used to describe the period in European history when the rebirth of intellectual and artistic appreciation of Graeco-Roman culture gave rise to the modern individual as well as the social and cultural institutions that define so many people in the western world today.

                 Art historians often view the Renaissance as beginning as early as the 13th century, with the art of Giotto and Cimabue, and ending in the late 16th century with the work of Michelangelo and Venetian painters like Titian. Literary scholars in the Anglo-American world take a very different perspective, focusing on the rise of vernacular English literature in the 16th and 17th centuries in the poetry and drama of Spenser, Shakespeare, and Milton. 

                 Historians take a different approach again, labelling the period c.1500–1700 as ‘early modern’, rather than ‘Renaissance’. These differences in dating and even naming the Renaissance have become so intense that the validity of the term is now in doubt. Does it have any meaning any more? Is it possible to separate the Renaissance from the Middle Ages that preceded it, and the modern world that came after it? Does it underpin a belief in European cultural superiority? To answer these questions, we need to understand how the term ‘Renaissance’ itself came into being.No 16th-century audience would have recognized the term ‘Renaissance’. 

                 The Italian word rinascita (‘rebirth’) was used in the 16th century to refer to the revival of classical culture. But the specific French word ‘Renaissance’ was not used as a descriptive historical phrase until the middle of the 19th century. The first person to use the term was the French historian Jules Michelet, a French nationalist deeply committed to the egalitarian principles of the French Revolution. Between 1833 and 1862 Michelet worked on his greatest project, the multi–volume History of France. He was a progressive republican, vociferous in his condemnation of both the aristocracy and the church. In 1855 he published his seventh volume of the History, entitled La Renaissance. For him the Renaissance meant:

. . . the discovery of the world and the discovery of man. The sixteenth century . . . went from Columbus to Copernicus, from Copernicus to Galileo, from the discovery of the earth to that of the heavens. Man refound himself.

                 The scientific discoveries of explorers and thinkers like Columbus, Copernicus, and Galileo went hand in hand with more philosophical definitions of individuality that Michelet identified in the writings of Rabelais, Montaigne, and Shakespeare. This new spirit was contrasted with what Michelet viewed as the ‘bizarre and monstrous’ quality of the Middle Ages. To him the Renaissance represented a progressive, democratic condition that celebrated the great virtues he valued – Reason, Truth, Art, and Beauty. According to Michelet, the Renaissance ‘recognized itself as identical at heart with the modern age’.

                 Michelet was the first thinker to define the Renaissance as a decisive historical period in European culture that represented a crucial break with the Middle Ages, and which created a modern understanding of humanity and its place in the world. He also promoted the Renaissance as representing a certain spirit or attitude, as much as referring to a specific historical period. Michelet’s Renaissance does not happen in Italy in the 14th and 15th centuries, as we have come to expect. Instead, his Renaissance takes place in the 16th century. As a French nationalist, Michelet was eager to claim the Renaissance as a French phenomenon. As a republican he also rejected what he saw as 14th-century Italy’s admiration for church and political tyranny as deeply undemocratic, and hence not part of the spirit of the Renaissance.

                 Michelet’s story of the Renaissance was shaped decisively by his own 19th-century circumstances. In fact, the values of Michelet’s Renaissance sound strikingly close to those of his cherished French Revolution: espousing the values of freedom, reason, and democracy, rejecting political and religious tyranny, and enshrining the spirit of freedom and the dignity of ‘man’. Disappointed in the failure of these values in his own time, Michelet went in search of a historical moment where the values of liberty and egalitarianism triumphed and promised a modern world free of tyranny. 

A Global Renaissance

                 One of the problems with the classic definitions of the Renaissance proposed is that they celebrate the achievements of European civilization to the exclusion of all others. It is no coincidence that the period that witnessed the invention of the term was also the moment at which Europe was most aggressively asserting its imperial dominance across the globe. In recent years, alternative approaches to the Renaissance from history, economics, and anthropology have complicated this picture, and offered alternative factors crucial to understanding the Renaissance, but which were dismissed by 19th-century thinkers like Michelet and Burckhardt as irrelevant. This chapter situates the Renaissance within the wider international world. It argues that trade, finance, commodities, patronage, imperial conflict, and the exchange with different cultures were all key elements of the Renaissance. Focusing on these issues offers a different understanding of what shaped the Renaissance. It also leads us to think of the creativity of the Renaissance as not confined to painting, writing, sculpture, and architecture. Other artefacts such as ceramics, textiles, metalwork, and furniture also shaped people’s beliefs and attitudes, even though many of these objects have since been neglected, destroyed, or lost.

               Another famous Renaissance painting that raises many of these issues is Gentile and Giovanni Bellini’s painting Saint Mark 
Gentile and Giovanni Bellini’s Saint Mark Preaching in Alexandria (1504–7) captures Europe’s fascination with the culture, architecture, and communities of the east.

               Preaching in Alexandria, the centrepiece of the Pinacoteca di Brera Renaissance collection in Milan. The Bellini painting depicts St Mark, the founder of the Christian Church in Alexandria, where he was martyred around ad 75, and patron saint of Venice. In the painting Mark stands in a pulpit, preaching to a group of oriental women swathed in white mantles. Behind Mark stands a group of Venetian noblemen, while in front of the saint is an extraordinary array of oriental figures that mingle easily with more Europeans. They include Egyptian Mamluks, North African ‘Moors’, Ottomans, Persians, Ethiopians, and Tartars.

               The drama of the action takes place in the bottom third of the painting; the rest of the canvas is dominated by the dramatic landscape of Alexandria. A domed Byzantine basilica, an imaginative recreation of St Mark’s Alexandrian church, dominates the backdrop. In the piazza Oriental figures converse, some on horseback, others leading camels and a giraffe. The houses that face onto the square are adorned with Egyptian grilles and tiles. Islamic carpets and rugs hang from the windows. The minarets, columns, and pillars that make up the skyline are a mixture of Alexandrian landmarks and the Bellinis’ own invention. The basilica is an eclectic mixture of elements of the Church of San Marco in Venice and Hagia Sophia in Constantinople, while the towers and columns in the distance correspond to some of Alexandria’s most famous landmarks, many of which had already been emulated in the architecture of Venice itself.At first the painting appears to be a pious image of the Christian martyr preaching to a group of ‘unbelievers’, drawing on the classical world so precious to Renaissance thinkers and artists. However, this only tells one side of the story. Although Mark is dressed as an ancient Roman, in keeping with his life in 1st-century Alexandria, the garments of the audience are recognizably late 15th century, as are the surrounding buildings.


               The Bellinis depict the intermingling of communities and cultures in a scene that evokes both the western church and the eastern marketplace. The painting is a combination of two worlds: the contemporary and the classical. At the same time as evoking the world of 1st-century Alexandria and the life of St Mark, the artists are also keen to portray Venice’s relationship with contemporary, late 15th-century Alexandria. Commissioned to paint a story of the history of Venice’s patron saint, they depict St Mark in a contemporary setting that would have been recognizable to many wealthy and influential Venetians. This is a familiar feature of Renaissance art and literature: dressing the contemporary world up in the clothes of the past as a way of understanding the present.

Thursday 18 May 2017

The Benefits of the Invisible Hand

Smith argued that these three ingredients would lead to a "natural harmony" of interests between workers, landlords, and capitalists.Recall the pin factory, where management and labor had to work together to achieve their ends, and the woolen coat that required the"joint labor" of workmen, merchants, and carriers from around the world. On a general scale, the voluntary self-interest of millions of individuals would create a stable, prosperous society without the need for central direction by the state. His doctrine of enlightened self-interest is often called "the invisible hand," based on a famous passage (paraphrased) from The Wealth of Nations: "By pursuing his own self interest, every individual is led by an invisible hand to promote the public interest" (423).

             Adam Smith's invisible hand doctrine has become a popular metaphor for unfettered market capitalism. Although Smith uses the term only once in The Wealth of Nations, and sparingly elsewhere, the phrase "invisible hand" has come to symbolize the workings of the market economy as well as the workings of natural science (Ylikoski 1995).

             Defenders of market economics use it in a positive way, characterizing the market hand as "gentle" (Harris 1998), "wise" and "far reaching" (Joyce 2001), one that "improves the lives of people" (Bush 2002), while contrasting it with the "visible hand," "the hidden hand,"
"the grabbing hand," "the dead hand," and the "iron fist" of government, whose "invisible foot tramples on people's hopes and destroys their dreams" (Shleifer and Vishny 1998, 3^1; Lindsey 2002; Bush 2002). Critics use contrasting comparisons to express their hostility toward capitalism.To them, the invisible hand of the market may be a "backhand" (Brennan and Pettit 1993), "trembling" and "getting stuck" and "amputated" (Hahn 1982), "palsied" (Stiglitz 2001, 473),"bloody
(Rothschild 2001, 119), and an "iron fist of competition"
(Roemer 1988, 2-3).

             The invisible hand concept has received surprising praise from economists across the political spectrum. One would expect high praise from free-market advocates, of course. Milton Friedman refers to Adam Smith's symbol as a "key insight" into the cooperative, self-regulating "power of the market [to] produce our food, our clothing, our housing" (Friedman and Friedman 1980, 1). "His vision of the way in which the voluntary actions of millions of individuals can be coordinated through a price system without central direction . . . is a highly sophisticated and subtle insight" (Friedman 1978, 17; cf.Friedman 1981).Not to be outdone are Keynesian economists. Despite its imperfections, "the invisible hand has an astonishing capacity to handle a coordination problem of truly enormous proportions," declare William Baumol and Alan Blinder (2001, 214). Frank Hahn honors the invisible hand theory as "astonishing" and an appropriate metaphor."Whatever criticisms I shall level at the theory later, I should like to record that it is a major intellectual achievement. . . . The invisible hand works in harmony [that] leads to the growth in the output of goods which people desire" (Hahn 1982, 1, 4, 8).

Smith's References to the Invisible Hand


             Surprisingly, Adam Smith uses the expression "invisible hand" only three times in his writings. The references are so sparse that economists and political commentators seldom mentioned the invisible hand idea by name in the nineteenth century. No references were made to it during the celebrations of the centenary of The Wealth of Nations in 1876. In fact, in the famed edited volume by Edwin Cannan, published in 1904, the index does not include a separate entry for "invisible hand." The term only became a popular symbol in the twentieth century (Rothschild 2001, 117-18). But this historical fact should not imply that Smith's metaphor is marginal to his philosophy; it is in reality the central element to his philosophy.

               The first mention of the invisible hand is found in Smith's "History of Astronomy," where he discusses superstitious peoples who ascribed unusual events to the handiwork of unseen gods:
Among savages, as well as in the early ages of Heathen antiquity, it is the irregular events of nature only that are ascribed to the agency and power of their gods. Fire burns, and water refreshes; heavy bodies descend and lighter substances fly upwards, by the necessity of their own nature; nor was the invisible hand of Jupiter ever apprehended to be employed in those matters. (Smith 1982, 49)

             A full statement of the invisible hand's economic power occurs in The Theory of Moral Sentiments, when Smith describes some unpleasant rich landlords who in "their natural selfishness and rapacity"pursue "their own vain and insatiable desires." And yet they employ several thousand poor workers to produce luxury products: The rest he [the proprietor] is obliged to distribute . . . among those. . . which are employed in the economy of greatness; all of whom thus derive from his luxury and caprice, that share of the necessaries of life, which they would in vain have expected from his humanity or his justice. . . . [T]hey divide with the poor the produce of all their improvements. They are led by an invisible hand to,... without intending it, without knowing it, advance the interests of the society. (Smith 1982 [1759], 183-85)"The third mention, already quoted above, occurs in a chapter on international trade in The Wealth of Nations, where Smith argues against restrictions on imports, and against the merchants and manufacturers who support their mercantilist views. Here is the complete quotation:As every individual, therefore, endeavours as much as he can both to employ his capital in the support of domestic industry, and so to direct that industry that its produce may be of the greatest value; every individual necessarily labours to render the annual revenue of the society as great as he can. He generally, indeed, neither intends to promote the public interest, nor knows how much he is promoting it.... [A]nd by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was no part of it.

             By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. (Smith 1965 [1776], 423)

Marx and Communism

Yet, like Cain in the Bible, Marx is cursed with a black mark in history.

              His name will forever be associated with the dark side of communism. A spectre is haunting Karl Marx—the history of Lenin, Stalin, Mao, and Pol Pot, and the millions who died and suffered under the "evil empire," as Ronald Reagan called it. Apologists say Marx cannot be held accountable 1. I think German sociologist Max Weber deserves this honour. See Skousen (2001), chapter 10. for his communist followers' atrocities and even assert that Marx would have been one of the first to be executed or sent to the Gulag. Perhaps.

              For one thing, he vehemently opposed press censorship throughout his career. Yet, without Marx, could there have been such a violent revolution and repression? Did not Marx support a "reign of terror" on the bourgeoisie? As one bitter critic put it, "In the name of human progress, Marx has probably caused more death, misery, degradation and despair than any man who ever lived" (Downs 1983, 299).

Marx Engenders Youthful Fanaticism 

              Among schools of thought, no other economist or philosopher engenders so much passion and religious fever as Marx. Above all, Marx was a visionary and a revolutionary idol, not just an economist. In reading The Communist Manifesto, written over 150 years ago, one cannot help feeling the passionate power, the pungent style, and the astonishing simplicity of Marx and Engels's words (1964 [1848]).

              Youthful followers become true believers, and it usually takes them years to grow out of their Marxist addiction. It happened to Robert Heilbroner, Mark Blaug, Whittaker Chambers, and David Horowitz. I even saw it among my students at Rollins College, a decade after Soviet communism had collapsed and Marxism was supposedly dead. In my class, "Survey of Great Economists," I require students to read a book authored by an economist. One student chose The Communist Manifesto.

              After reading it, he came to me and exclaimed with some emotion, "This is incredible! I must do my book report on this!" pointing to his well-marked copy. It was eerie. In my lectures, I did my best to counter Marxian doctrine, but it didn't matter. He was converted. I can easily see how a young revolutionary could be swayed by these unforgettable lines from the polemical Communist Manifesto: A spectre is haunting Europe—the spectre of Communism... The history of all hitherto existing society is the history of class struggles. . . .The bourgeoisie has pitilessly torn asunder the motley feudal ties that bound man to his 'natural superiors,' and has left remaining no other nexus between man and man than naked self-interest, than callous 'cash payment.'...Veiled by political and religious illusions, it has substituted naked, shameless, direct, brutal exploitation. . . . Let the ruling classes tremble at the communistic revolution. The proletarians have nothing to lose but their chains. They have a world to win. WORKING MEN OF.


ALL COUNTRIES, UNITE! (1964 [1848])


              Marshall Berman, a longtime Marxist living in New York City, recounts how he, as a youth, encountered another book by Marx, Economic and Philosophical Manuscripts of1844. This book generated the same kind of fanatic enthusiasm. "Suddenly I was in a sweat, melting, shedding clothes and tears, flashing hot and cold" (Berman 1999, 7)—not from staring at Playboy magazine or trading penny stock for the first time, but from reading Marx!

              In many ways, Marxism has become a quasi-religion, with its slogans, symbols, red banners, hymns, party fellowship, apostles, martyrs, bible, and definitive truth. "Marx had the self-assurance of a prophet who had talked to God. ... He was a poet, prophet, and moralist speaking as a philosopher and economist; his doctrine is not to be tested against mere facts but to be received as ethical-religious truth... Marx was to lead the Chosen People out of slavery to the New Jerusalem Becoming a Marxist or a Communist is like falling in love, an essentially emotional commitment" (Wesson 1976, 29-30, 158). A guidebook for youth was published in 1935 entitled Teachings of Marx for Girls and Boys, authored by protestant minister William Montgomery Brown, highlighted by pictures on the cover of Marx's "greatest pupils," Lenin and Stalin.

Marx's Contributions to Economics

              Few economists break out into other disciplines as did Karl Marx. There's Marx the philosopher, Marx the historian, Marx the political scientist, Marx the sociologist, and Marx the literary critic. He was prolific and wrote unendingly about nearly everything. Even today a compilation of the complete works of Marx and his colleague Friedrich Engels has not been finished. The commentaries on Marx and related subjects are so vast that it would take volumes to tell it all. (On the Internet, Amazon.com lists over 4,000 entries on Marx and communism, second only to Jesus and Christianity.) Thus, our chapter on Marx must of necessity be limited largely to his economic contributions. Even then, Marx the economist is not an easy subject.

              Marx was probably the first major economist to establish his own school of thought, with its own methodology and specialized language. In creating his own school in his classic work, Capital (1976 [1867]), he contrasted his system with that of laissez-faire—as espoused by Adam Smith, J.-B. Say, and David Ricardo, among others. It was Marx who dubbed laissez-faire the "classical school." In developing a Marxist approach to economics, he created his own vocabulary: surplus value, reproduction, bourgeoisie and proletarians, historical materialism, vulgar economy, monopoly capitalism, and so on. He invented the term "capitalism."2 Since Marx, economics has never been the same. Today, there is no universally acceptable macro model of the economy as there is in physics or mathematics—there are only warring schools of economics.

Monday 15 May 2017

Debt and Deflation

Contrary to today,deflation-prices falling from year to year instead of rising-wasn't perceiving as a threat every time.The alive Economies faced that phenomenon in stages before 20th century along several century.In fact, Milton Friedman has upholded that in theory that governments should endure a certain amount of deflation..

                  While the prices in market was falling slowly,this means every dollar and pound in your pocket,were getting value.Even if your income does not increase every year,your purchasing power increases.Like an economy with high inflation,you don't need to worry about that your money value falling.

                   Deflation and Crisis The innocent deflation left its place to bad experiences with in 20th century falling prices.This status was same in 1930's crisis too.Crisis followed the pretty rising prices of share(shares was being purchased with debts instead of savings money.) in 1920s.In 1929,the investors noticed the winnings does not based on reality,it based on more hope and speculation,and the stock market collapsed.Followed by US economy and the other national economies the most darkness years were lived.The banks were went bankrupt with heavy debts,and the real estate prices were fell,companies were shut down and millions people be unemployed.The basic of in crisis the most important problem was deflation.Prices began to fall when people understood that the era of economics, defined as "The Crazy Twenties," was artificially driven by greed and frenzy.Share and real estates prices fell,but the value of the debts that people took to buy them remained stable.So while prices are falling by 10 percent per year, the cost of borrowing at the cost of $ 100-the current purchasing power- was became $ 110.Millions of people in the digits, which are not directly affected by the collapse of the stock exchange,because of unexpectedly increment of the value of debt,defeated by inflation.

                  A Hard Spiral Deflation doesn't only debtors,it affects whole economy.As prices drop, people start stacking money because they know everything will be cheaper in a few months time.The money spend unwillingness reduce prices even more.Moreoever,companies notice the money cost rises because of people salaries arranging by legal contracts.The previous was $ 1000 salary,and now its value $ 1100.It is a kind of disaster for employers because even if the employer sell the goods and services more less,employer have to fulfill the same price cost.At first sight,even if it looks good for workers,practically,it does mean companies will fire many workers for carry on.At the same way, even if the banks will take more mortgage payment from some of debtors(compared to other prices in the economy),cannot collect any payment from the other debtors.

                   Some of this symptoms reminds like during the high inflation.Both of them contain in real prices uncontrollable rising in certain products.The difference is that while inflation increase the value of consumption goods, deflation contain inflating debt and other liabilities.One of the huge risks of deflation,in response to the steady decline in prices the companies who is in retrenchment, that their losses are getting bigger and that means pulling the prices further down.This creates a situation even more difficult than the inflation spiral,because in modern economies the mechanism of struggle against inflation has developed even more.

                    Diagnosis and Solutions The economic explaing of deflation,reduction of the money quantity in system or increase in the supply of goods and services.In that case,while a lot of money is in pursuit of little goods in inflation,this situation will the exact opposite in deflation.In the period of Great Depression,the cause of this in Japan 1990s and 2000s was the shortage of money.The reason for the benign inflation of the 19th century, on the contrary, was a surplus of supply that emerged more productively.

                   Generally,central bank checks the inflation with interest rates.Even so,they cannot fall below zero of that rate.That is mean they will apply more unusual methods while the prices down. So,they have to apply more unusual methods when prices are falling.Contrary to the inflation situation where the money in the economy is being kept constant,Central Banks start to cash transpose to system.It could make it in different ways;they buy assets such as bonds and shares or increase the money in the banks of commercial banks.To all this method called as "Quantitative Easing."
   
                At the end of the millennium,in Japan,kind of methods were used in USA and UK after 2008 crisis too.From debt-borne financial crises,tried to get out of like this way.

Main Message


Declining prices could damage the economy too.