Deflationistas also give short shrift to the notion that in a world where economies are connected to each other through currency markets and other mechanisms, deflationary pressures can easily be exported from one location to another, whether through intentional policy maneuvers or not.
In "Swiss Slide into Deflation Signals the Next Chapter of this Global Crisis," The Telegraph's Ambrose Evans-Pritchard suggests that such a strategy could find a popular and growing appeal, sparking a contagious dash towards currency debasement that leaves some countries holding the inflationary bag.
Watch Switzerland closely. It is tipping into deflation, the first Western country to succumb to Japan's disease.
Swiss consumer prices fell 0.4pc in March (year-on-year). Swiss CPI will be minus 1pc at least by July, nearing the level where spending psychology changes. By the time you have a self-feeding spiral, it is too late.
"This is something that we must prevent at all costs. The current situation is extraordinarily serious," said Philipp Hildebrand, a governor of the Swiss National Bank.
The SNB is not easily spooked. It is the world's benchmark bank, the keeper of the monetary flame. Yet even the SNB's hard men have thrown away the rule book, taking emergency action to force down the exchange rate of the Swiss franc.
Here lies the danger. If other countries try to export deflation by this means, we will face a second phase of the global crisis. Taiwan is already devaluing. Korea, Singapore, and Sweden all seem tempted to follow. Japan is chomping at the bit.