Artistry and reality.

Talking Hungary: “The Economist” Apparently Doesn’t Know what Debt Deflation Is

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A new mortgage law annoys the banks, but will do little for the economy

…goes the title for a piece from The Economist back on October 1.

I’ll be focusing a big on Hungary’s economic situation this month and from now on in general.

So, a major development in early October was the decision by Hungarian Prime Minister Viktor Orban’s government to allow homeowners who took foreign currency mortgage loans (mostly in Swiss Francs) to repay them in Hungarian Forints at their previous exchange rate (before they depreciated during the course of the economic crisis.)

The article author for The Economist claims the new reforms “will do little to help economy”…

But apparently is unaware that the more money that Hungarian families are using to pay down inflated mortgages, the less money they can use on goods and services in the real economy.

This is the essence of debt deflation..Irving Fisher knew all about it over 80 years ago. But mainstream economics, which is what The Economist practices, still doesn’t get it.