Deflation in just one year? That would be even worse than inflation

Inflation is always and everywhere a monetary phenomenon. The American Nobel Prize winner Milton Friedmann also received the Nobel Prize in 1976 for this guiding principle: according to the economist who died in 2006, inflation is the result of an oversupply of money, with the money supply increasing faster than production.

In fact, today’s inflation was preceded by a sharp expansion in the money supply. But should the theory apply to a collapse in the money supply, the global economy could soon experience the opposite of inflation: deflation.