Who is afraid of a little deflation? Wall Street Journal Op-Ed.
Fears of "tipping" into deflation are overblown. I poke a little fun at sticky wages, Fed headroom, deflation-induced defaults and the long-predicted Keynesian deflationary spiral that never seems to happen, and the doom and gloom language from the ECB, IMF and other worriers who just happen to (of course) want to spend trillions to fix this latest "biggest economic problem."
One point that went by a little too quickly in the interest of space: Deflation can be a symptom of bad things. The issue is whether deflation is by itself a bad thing, and causes further damage.
Also, I should have been clearer on a big bottom line: we don't need huge "infrastructure" projects just to save us from deflation.
They ask me not to post the whole thing for 30 days, so those of you without WSJ access will just have to google or wait breathlessly.
Update: Ed Leamer wrote a great similar piece for Economists' Voice a while back "Deflation Dread Disorder; 'The CPI is Falling!'" In addition to a better title, he's got a cool Godzilla reference and picture.