[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-0-en-105":3,"doc-seo-321986-105":59,"doc-detail-321986-en":131},{"code":4,"msg":5,"data":6},0,"success",[7,13,18,23,28,33,38,43,48,51,55],{"id":8,"doc_module":4,"doc_module_name":9,"category_name":10,"show_sort_weight":11,"slug":12},1,"Document","Story & Novel",90,"story-novel",{"id":14,"doc_module":4,"doc_module_name":9,"category_name":15,"show_sort_weight":16,"slug":17},2,"Literature",80,"literature",{"id":19,"doc_module":4,"doc_module_name":9,"category_name":20,"show_sort_weight":21,"slug":22},4,"Exam",70,"exam",{"id":24,"doc_module":4,"doc_module_name":9,"category_name":25,"show_sort_weight":26,"slug":27},5,"Comic",60,"comic",{"id":29,"doc_module":4,"doc_module_name":9,"category_name":30,"show_sort_weight":31,"slug":32},6,"Technology",50,"technology",{"id":34,"doc_module":4,"doc_module_name":9,"category_name":35,"show_sort_weight":36,"slug":37},7,"Healthcare",40,"healthcare",{"id":39,"doc_module":4,"doc_module_name":9,"category_name":40,"show_sort_weight":41,"slug":42},8,"Research & Report",30,"research-report",{"id":44,"doc_module":4,"doc_module_name":9,"category_name":45,"show_sort_weight":46,"slug":47},9,"Religion & Spirituality",20,"religion-spirituality",{"id":46,"doc_module":4,"doc_module_name":9,"category_name":49,"show_sort_weight":46,"slug":50},"World Cup","world-cup",{"id":52,"doc_module":4,"doc_module_name":9,"category_name":53,"show_sort_weight":52,"slug":54},10,"Lifestyle","lifestyle",{"id":56,"doc_module":4,"doc_module_name":9,"category_name":57,"show_sort_weight":24,"slug":58},19,"General","general",{"code":4,"msg":60,"data":61},"ok",{"site_id":62,"language":63,"slug":64,"title":65,"keywords":66,"description":67,"schema_data":68,"social_meta":124,"head_meta":126,"extra_data":128,"updated_unix":130},105,"en","economiccommentary-debt-deflation-and-corporate-finance","ECONOMICCOMMENTARY - Debt-Deflation and Corporate Finance","","Economic Commentary examines how the rapid growth of public and private domestic debt, together with foreign debt owed to American banks, has raised concerns about negative impacts on the overall economy and specific industries. It discusses theoretical dangers of an overleveraged, debt-based economy, drawing on Irving Fisher’s 1933 analysis of debt, maturity structure, overindebtedness, and debt-deflation dynamics. The analysis connects distressed asset liquidation, declining prices, shrinking profits and net worth, bank runs, and output losses. It also links monetary policy failures to severe depressions and evaluates parallels in agricultural and real-estate sectors.",{"@graph":69,"@context":123},[70,84,106],{"@type":71,"itemListElement":72},"BreadcrumbList",[73,77,79,82],{"item":74,"name":75,"@type":76,"position":8},"https://docshare.wps.com","Home","ListItem",{"item":78,"name":9,"@type":76,"position":14},"https://docshare.wps.com/document/",{"item":80,"name":40,"@type":76,"position":81},"https://docshare.wps.com/document/research-report/",3,{"item":83,"name":65,"@type":76,"position":19},"https://docshare.wps.com/document/economiccommentary-debt-deflation-and-corporate-finance/321986/",{"url":83,"name":65,"@type":85,"image":86,"author":91,"headline":65,"publisher":94,"fileFormat":97,"inLanguage":63,"description":67,"dateModified":98,"datePublished":99,"encodingFormat":97,"isAccessibleForFree":100,"interactionStatistic":101},"DigitalDocument",{"url":87,"@type":88,"width":89,"height":90},"https://docshare.wps.com/thumbnails/economiccommentary-debt-deflation-and-corporate-finance/321986.png","ImageObject",300,407,{"name":92,"@type":93},"Sage","Person",{"url":74,"name":95,"@type":96},"DocShare","Organization","application/pdf","2026-11-14","2026-09-21",true,{"@type":102,"interactionType":103,"userInteractionCount":105},"InteractionCounter",{"@type":104},"ViewAction",13,{"@type":107,"mainEntity":108},"FAQPage",[109,115,119],{"name":110,"@type":111,"acceptedAnswer":112},"What main risk does the commentary associate with a debt buildup?","Question",{"text":113,"@type":114},"It warns that accumulating debt can harm the economy broadly and specific industries by triggering debt-deflation and corporate financial stress.","Answer",{"name":116,"@type":111,"acceptedAnswer":117},"How does Irving Fisher describe the mechanics of debt-deflation?",{"text":118,"@type":114},"He links overindebted borrowers’ distress selling to falling prices, reduced business profits and net worth, bankruptcies, loss of confidence, and possible hoarding of currency and bank runs.",{"name":120,"@type":111,"acceptedAnswer":121},"Which policy failures are suggested as contributing to the severity of past depressions?",{"text":122,"@type":114},"The commentary points to monetary authorities not offsetting rapid deflationary forces by creating more liquidity through open-market operations, currency issuance, or Treasury funds placed in banking systems.","https://schema.org",{"og:url":83,"og:type":125,"og:title":65,"og:site_name":95,"og:description":67},"article",{"robots":127,"canonical":83},"index,follow",{"doc_id":129,"site_id":62},321986,1790336631,{"code":4,"msg":5,"data":132},{"doc_id":129,"user_id":133,"nickname":92,"user_avatar":134,"doc_module":4,"category_id":39,"category_name":40,"doc_title":65,"doc_description":67,"doc_content":135,"file_id":136,"file_url":137,"file_type":138,"file_size":139,"view_count":105,"is_deleted":4,"is_public":8,"is_downloadable":8,"audit_status":8,"page_count":24,"language":140,"language_code":63,"site_id":62,"html_lang":63,"table_of_contents":141,"faqs":142,"seo_title":143,"seo_description":67,"update_tm":144,"read_time":105,"preview_page_count":4},687197207057,"https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0","ECONOMICCOMMENTARY  \nOver the past few years,the rapidgrowthin the level of public and private domesticdebt,and growth in the level of foreigndebt owed to American banks,has been amajor source of concern for our legislatorsand financial regulators.  \nThis concern centers on the possiblenegative effects that debt buildup mighthave on the economy as a whole and onindustry in particular.  \nIn this Economic Commentary,we willfirst discuss the theoretical dangers facedby an overleveraged,debt-based economy.Against this background,major economicstabilizers and the effect that expectationsof economic stability may be having oncorporate financing decisions will beconsidered.  \nFirst,the historical context.Probablythe first serious consideration of themacroeconomic effects of excessive debtaccumulation was that of the distinguishedeconomist and author Irving Fisher,whodied in 1947.  \nIn a 1933 paper,he notes that debt is acomplex phenomenon.It is not a simple,one-dimensional factor.In addition to thetotal of dollars owed,one must also takeinto account the maturity structure of thedebt—that is,the points in time at whichvarious payments come due.Moreover,theconcept of overindebtedness is a relativeone,which is dependent upon such factorsas total national wealth,national income,and the availability of liquid assets.  \nFisher thought that the severity of manyhistorical business cycles could not beexplained by the traditional theories usedby classical economists.Those theories  \nJerome S.Fons is an economist at the FederalReserve Bank of Cleveland.The author would likeo thank Mark Sniderman and Walker Todd fortheir helpful comments.  \nThe vieus stated herein are those of the authorand not necessarily those of the FederalReserveBankof Cleveland orof the Board of Gouernors ofthe Federal Reserve System.  \ntended to focus on things like the relativeover and under-production of various com-modities,their relative prices,and theeffects of disturbances (fire,earthquakes,pestilence,etc.)from“outside”the econo-my.Although certain forms of disturbancemight succeed in explaining much of thecyclical expansion and contraction of busi-ness activity,he felt that major downturnsrequired something extra:namely,overin-debtedness and deflation.The existence ofthese conditions was considered sufficientto cause a disruption in all other economicvariables.In particular,Fisher felt thatgrowing overindebtedness tended to exac-erbate overspeculation,which wouldincrease until the following scenario beganto unfold.  \nFirst,asset liquidation by overindebtedborrowers would turn into distress selling.The distress selling would cause a contrac-tion in bank deposits as loans were retired.In addition,asset sales would take place at\"fire sale\"prices,leading to a fall in theoverall price level.Lower prices wouldthen reduce business profits,causing areduction in business net worth,therebyleading to bankruptcies.The loss of confi-dence in the economy could also lead tothe hoarding of convertible currency andto bank runs.In such a world,nominalinterest rates would fall,while realratesrose.The overall effect would be a reduc-tion in output,employment,and trade.  \nFisher felt that,in thesecircumstances,distress selling could cause the price levelto fall faster than debt could be liquidated.  \nDebt-Deflation andCorporate Finance  \nby Jerome S.Fons  \nThis would result in real debts rising,rather than falling as intended.Onlythrough some form of reflation could catas-trophe be avoided.Moreover,he reasonedthat deflation resulting from any causeother than overindebtedness would nothave the same devastating consequences.  \nAmong the causes of overindebtednessenvisioned by Fisher was the existence ofnew opportunities to invest at above-normalprospective profits.The develop-ment of new inventions and technologiesprovides incentives for such prospects.The lure of large dividends,as well ascapital gains made possible by excessiveborrowing,contributes to the bubble effectenvisioned in his ","cbCaidDXPkCWrSr2","https://ap.wps.com/l/cbCaidDXPkCWrSr2","pdf",1411825,"English","# Lessons for the '80s\n## Debt-Deflation and Corporate Finance","[{\"question\":\"What main risk does the commentary associate with a debt buildup?\",\"answer\":\"It warns that accumulating debt can harm the economy broadly and specific industries by triggering debt-deflation and corporate financial stress.\"},{\"question\":\"How does Irving Fisher describe the mechanics of debt-deflation?\",\"answer\":\"He links overindebted borrowers’ distress selling to falling prices, reduced business profits and net worth, bankruptcies, loss of confidence, and possible hoarding of currency and bank runs.\"},{\"question\":\"Which policy failures are suggested as contributing to the severity of past depressions?\",\"answer\":\"The commentary points to monetary authorities not offsetting rapid deflationary forces by creating more liquidity through open-market operations, currency issuance, or Treasury funds placed in banking systems.\"}]","ECONOMICCOMMENTARY - Debt-Deflation and Corporate Finance | PDF",1789960754]