And he developed his debt-deflation theory. In 1933 in Econometrica, published by the Econometric Society, which he co-founded, he described debt deflation as a sequence of distress-selling, falling asset prices, rising real interest rates, more distress-selling, falling velocity, declining net worth, rising bankruptcies, bank runs, curtailment of credit, dumping of assets by banks, growing distrust and hoarding.Fisher was also one of the great monetarist, the Milton Friedman of the early 20th century.
Wednesday, February 18, 2009
Fisher in the news
A few days ago economist.com had an article about Irving Fisher, who argued that a feedback cycle involving deflation and debt was a source of the Great Depression.