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John Cochrane recalls that there were prominent editorials and open letters predicting uncontrollable deflation spirals when interest rates were near zero.
He notes that despite these warnings, inflation actually stayed within decimal points of its target for over a decade, challenging many economic theories that anticipated prolonged deflation.
Cochrane has previously examined how central bankers use equations to explain monetary policy expectations and mechanisms in an earlier analysis. He has also argued that policies aimed at redistributing wealth toward consumption may reduce investment and productive capital, as outlined in a separate commentary. His recent comments add further context to his ongoing focus on monetary policy outcomes.