Deflation, the withdrawal from circulation of some of the excess paper money in order to make its amounl correspond better to the amount of gold necessary for circulation. This process is opposite to inflation. The governments of capitalist countries resort to deflationary policies to improve the balance of payments and to curb inflation to a certain extent. This policy is implemented through the credit, money and tax mechanisms. Its basic techniques include increased taxes, reduction of some government expenditure, increased bank rates, and other measures to reduce the demand for credit, step up savings, and tighten consumer credit. Open market operations such as the sale of state securities by central banks and increases in the minimal norm of contingency reserves for banks in order to reduce the overall amount of the loan capital have recently been widely used. Deflationary policies are a heavy burden for the working people of the capitalist countries, because tax increases hit them hardest, while reductions in bank credits cut back production and increase unemployment.