Saturday 23 January 2010

Still on for deflation

This article, and others that it refers to, takes the view that the currently very high debt-to-GDP ratio, plus plenty of unused or under-used resources, indicate deflation rather than inflation. Cash (or long term US government debt) is king, for these American writers.

As I understand it, the British economy suffers even worse debt problems and also has excess productive capacity, so much the same argument would seem to apply here, too.

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