In 1933 American economist Irving Fisher developed the theory of debt deflation.

In another interpretation, price adjustment could make matters worse, causing what Irving Fisher called "debt deflation".

This will force the market driven debt deflation (and down pricing of assets) of private debt.

But it would at least free them from the debt deflation they would be consigned to under any euro bail-out.

Consequently, over a period of time an economy can become susceptible to debt deflation.

A second - and potentially even more dangerous - threat is of debt deflation.

The spiral is exacerbated as debt deflation kicks in.

To put it bluntly, the single currency will come to stand for wage falls, debt deflation and prolonged economic slumps.

The first is the natural reaction to the excesses of the credit boom of the late 1980s, and takes the form of debt deflation.

Austerity makes the problem worse, by intensifying debt deflation.