1982 headline in The New York Times.

 4/21/2009 2:12:40 PM. “Deflation refers to the persistent tendency, over an extended period of time, for prices and incomes to decline. I f deflation persist, businesses may shut down or reduce their production. As a result, unemployment may increase and wage rates may fall. The spiraling effect of deflation on prices and wages may create pessimism, and the economy could fall into a recession." Or as a 1982 headline in The New York Times put it, as prices rolled back briefly as a steep recession ended an era of inflation: "INFLATION HURTS, BUT DEFLATION COULD BE WORSE." (See below article from Independent Television News Limited) During the Great Depression, prices fell by as much as 20 to 30 percent in many countries, in a process that was both caused by and contributed to the downward economic spiral. Since then prices almost everywhere have marched almost invariably upward, with the main danger being cases where it rose too fast. The great exception was Japan, during what came to be known as its "lost decade.'' A gigantic real-estate boom in the 1980's came crashing down in 1991, bringing many other prices with it. Efforts to restart the economy foundered time and again, as businesses were not able to generate the kind of profits that would reignite prosperity's cycle of hiring and spending. Not until 2005 was the deflationary era finally declared to be over… ИНФОРМАЦИЯ К РАЗМЫШЛЕНИЮ: Euribor plays an important role in the European banking policy. This is the benchmark rate that prime banks charge to lend money to other prime banks. There are two points you must remember about the Euribor. First, the EBF (European Banking Federation) and ACI (Financial Markets Association) sponsor this rate. EBF represents approximately 5,000 European banks. These banks have headquarters in several European countries, including Germany, Austria, France, Italy, and many others. Second, these banks must meet stiff market criteria in order to be part of this consortium. Euribor stands for Euro Interbank Offered Rate. This daily rate, which varies, consists of average interest rates where banks let other banks borrow money. These transactions take place in the interbank market. Every day, the major banks in Europe calculate the interest rates by averaging them. As a result, the Euribor rate varies on a daily basis. Reuters then sorts out the Euribor calculation and publishes this information. 

Calculation of Euribor® Euribor® is calculated, on a daily basis, for periods of one week to one-year, however, the three month rate is considered the overall benchmark. The actual calculation of the rate is done by submission, from a panel of leading European banks, of the rate at which they believe a prime bank will quote to another prime bank for inter-bank term deposits within the euro zone. The highest and lowest 15% of all quotes are then eliminated and an unweighted average is calculated by Reuters from the remaining quotes to three decimal places.

MERCADOS DEL DIA

INDICE            Ultimo             Var.%              Var. pts    Volumen   Anterior       H

EURIBOR         1,7680         +0,00%          +0,0000         --         1,7680        00:00

RPI falls below zero Tuesday, April 21 10:00 am The headline rate of inflation, which includes mortgage payments, has fallen below zero for the first time in 50 years. RPI stood at 0.4 per cent last month - down from zero in February - showing the cost of living is actually getting cheaper. But negative RPI should not necessarily be welcomed. The figure is often used as a benchmark to set wage, state pension and other benefit increases. Last month's fall reflects February's cut in the cost of borrowing to 1 per cent, but as the Bank of England has slashed rates again since then, RPI could have further to tumble. The Consumer Prices Index (CPI) - the official measure of inflation - also fell. It was down to 2.9 per cent in March from 3.2 per cent in February. Still well above the Government's 2 per cent target, it is not affected by falling house prices and the recent cuts in interest rates. Food and non-alcoholic beverage costs were also lower, as fruit, vegetables and bread prices all fell compared with a year ago. Transport costs also played a part in pulling inflation down, mainly because of lower air fares on European routes compared with last March. Fuel also rose more slowly than a year ago, when it had just begun to climb to the peaks experienced last summer.