I’ve got a letter in the FT here. It is about whether deflation is such a spiffing idea, as Edward Gottesman the day before had asserted. After pointing out some factual errors, the conclusion I make is fairly predictable:
His greatest error is to imply that savings are necessarily virtuous, and spending necessarily vicious. Everything depends on the economic context. Keynes showed in theory, and the Great Depression in practice, how low savings can cause incomes to plummet. Deflation encourages people to put off their spending, thereby exacerbating a cyclical downswing, and causing huge wastage of economic and human potential. It is the last thing we need right now.