Harvard Economist Says Deflation No – Inflation Yes

By: Greg Mankiw

Here (in blue) is the yield on an inflation-adjusted bond and (in red) the yield on a nominal bond of approximately the same time-to-maturity. The negative inflation compensation that showed up a few months ago (when the blue line was well above the red) has shrunk to about zero. These relative yields are moving back toward a more normal, and healthier, alignment.

Ed. If you understand what that means then take a bow.

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