We are in a tough crisis. There is a deep-founded fear that this year will end with low inflation. Many economic journalists are up in arms over the coming catastrophe, and are recommending an attack against this evil phenomenon. The negative CPI rate for September (minus 0.2 percent) published just a few days ago has fired up their criticism, so that they are now seeking out whoever's responsible for the crime.

Once upon a time, a generation ago in the hyper-inflationary era of the early 1980s, we were all warned about the danger of hyper-inflation, which then reached 450 percent a year, and brought us down to the last dollar. We were also enlightened about the social injustice it created, as the poorer strata of society then paid the price; their wages were eroded month by month, while their taxes filled the state coffers. Hyper-inflation finally came to an end in 1985, but it didn't die. It fell sharply to 10-18 percent. Only in 1999 did we finally see inflation fall to Western levels.

The campaign to bring an end to hyper-inflation began during Jacob Frenkel's term of office as governor of the Bank of Israel, while the moving spirit behind the strict monetary policy was David Klein, who in time became the governor himself. At the time, in the mid-1990s, there were many who spoke out against the Frenkel-Klein policies. Journalists, economic pundits and businesspeople all claimed that you couldn't completely defeat inflation in Israel because there was an "underlying inflation" of 6 percent a year that could not be lowered, because the economy "was full of monopolies," which kept up prices, because of Israel's "special conditions" of waves of immigration and war, because raising interest rates would increase costs and cause more inflation, not less. One of those leading the clamor was Dan Propper, then head of the Manufacturers Association, and all of his claims have now been found out to be one big error.

And from one mistake to another. Instead of glorifying the low inflation rate, it has become a punching bag (at least for some of the papers), the big problem, a dreadful disaster, an enormous failure. But really low inflation (particularly in times of war) is a great achievement. It does not spur growth, but it sets up the preconditions for growth. Economies that enjoy long-term growth are those that have enjoyed long-term low inflation.

Low inflation is also a restraining factor in labor relations, because it means wages keep their value, as do welfare payments. Low inflation is the prestigious calling card for those joining the international world of business, because when an investor arrives in a foreign country, his first question is: What's the inflation rate around here? And if the rate is higher than the norm of 3 percent a year, then the place gets a black mark, because it means the central bank has failed in its job, and that's bad for business. In such a place, it's not worth investing.

So low inflation is a valuable gift for the Israeli economy and society. The news that this year will end with an inflation rate of around 1.5 percent, as will next year, is a graduation certificate for the economy, and a hearty advantage for society.