Vanguard Group execs say deflation a real risk for global economy

What is deflationcy?
What is deflationcy?   

Executives at Vanguard Group, the No. 1 U.S. mutual fund company, said on Thursday deflation is a real risk for the global economy while downplaying inflation concerns for the United States.

"Most people say, 'Hey, deflation, falling prices, isn't that great!"' Vanguard Chief Investment Officer Tim Buckley said during a live webcast. But as he explained, falling prices are not something to be celebrated, especially in a developed economy that relies on consumption to fuel gross domestic product growth.

Read MoreRichard Parsons: Yes, bubbles could be forming

As consumers hold off buying things, GDP shrinks.

"Once you're in the cycle, it very difficult to get out," Vanguard Chairman William McNabb added.

McNabb said there are no data that support the presence of a lot of inflationary pressure, especially in the U.S. economy.

"When you look at what drives inflation, wages are the largest component. Most people focus on commodity prices, but wages actually are far more important," McNabb said. "And we have not seen much inflation there."

Read MoreFear Fed hasn't learned its lesson: Roach

Buckley, who helps oversee $3.1 trillion in assets under management at Vanguard, said stocks have had a nice run, but bond investors should temper their expectations for 2015 as yields reside at historical lows.

"You can't expect that much return from bonds going forward," Buckley said.

Santelli Exchange: Manic deflation attitude
Santelli Exchange: Manic deflation attitude