The most dangerous deflation is that which has happened, big time, in the accountability of bank regulators.

Sir, you write: “The Eurozone cannot go on as it is. Growth is weak to non-existent” and you conclude in that “Deflation risk in Europe leaves no option but QE”, Saturday 10.

Nonsense. If Europe just threw out the windows those portfolio-invariant-credit-risk-weighted-equity-requirements for banks imposed by the Basel Committee; and which effectively blocks the fair access to bank credit of those perceived ex ante as risky, like small businesses and entrepreneurs, much more growth could be achieved; and even the QEs or any fiscal stimulus would have a chance to work better.

What stops this from happening? I am not sure, but one answer could be that admitting to a monstrous mistake could represent a too large embarrassment for the current president of the ECB, the former chairman of the Financial Stability Board… the “Whatever it takes”… (Except for that) Mario Draghi.

To consider what is perceived ex ante as risky to be more risky for the bank system than what is perceived as “absolutely safe” is a huge mistake. And to compound that mistake by allowing different equity requirements for bank assets based on credit risks already cleared for, introduces a distortion in the allocation of bank credit to the real economy, catapults it into being a monumental mistake.

PS. #IamnotFT I dare to think, and say, that expert regulators could succumb to stupid and dangerous group-think