Both Europe and the United States are on the brink of a "deflationary
spiral," with Europe's economic morass possibly lingering for a decade,
former Treasury Secretary Larry Summers has warned.
The European Central Bank (ECB)'s 1.1 trillion euro ($1.23 billion) quantitative easing (QE) program represents a positive step, but won't be enough to repair the damaged eurozone economy, said Summers, speaking at the World Economic Forum in Davos.
"Europe is on the brink of a deflationary spiral that could be gravely threatening to the process of growing standards of living, not for a year, but for a decade," he recently told Bloomberg TV. "Europe is lagging relative to every other region of the world. And the situation is getting worse."
In a deflationary spiral, households and firms cut spending while they wait for prices to fall further, causing the economy to slump, according to the Guardian.
The European Central Bank (ECB)'s 1.1 trillion euro ($1.23 billion) quantitative easing (QE) program represents a positive step, but won't be enough to repair the damaged eurozone economy, said Summers, speaking at the World Economic Forum in Davos.
"Europe is on the brink of a deflationary spiral that could be gravely threatening to the process of growing standards of living, not for a year, but for a decade," he recently told Bloomberg TV. "Europe is lagging relative to every other region of the world. And the situation is getting worse."
In a deflationary spiral, households and firms cut spending while they wait for prices to fall further, causing the economy to slump, according to the Guardian.
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