March 29, 2015

When the how to fight deflation is unequivocally dumb, and when deflation is the only good news in town

Sir, I refer to Gillian Tett’s “How deflation gave lower prices a bad name” March 29, with two brief comments:

One: Let’s suppose deflation is unequivocally bad. Even so to try to avoid it by artificially inflating the value of existing assets, by means of QEs, caring less about the creation of new assets, by means of bank regulations, sounds like something unequivocally dumb.

Two: For savers, who have sacrificed much consumption earlier in their lives, and who do now earn zero or even negative interests on what they consider as save investments, deflation must sound like the only good news in town.