I agree with your pithy analysis, but, respectfully, you don’t address the question as to what happens when ‘growth’ stops, as it has now, in ways which Gordon Brown, saviour of the universe, describes as ‘without historical precedent.’

I agree that we need to ‘post guards’ to ensure that inflation is kept under control, but wonder if the drooling halfwits whose unbridled public spending sprees have left the country flat broke in the middle of a global slump are the right sentries.

Thanks for your comment, though. You’re a genuine big brain and I suspect you’ve got an answer or two up your sleeve. I personally think we need to abandon the globalisation malarky. This doesn’t imply protectionism, but it does call for taking care of one’s own business and urging others to do the same. I suspect this will be the US agenda, at least until they have licked their wounds. Europe has never really done us any favours: I suspect the Germans and French will be thinking likewise.

John

If the choice is deflation, zero inflation or very low inflation, surely the latter’s the one go to for in that modest inflation is an unavoidable sign of a growing economy?

As the economy grows and demand for goods/services grows, temporary bottlenecks and modest supply shortages are unavoidable… demands exceeds supply for the good/service in question… prices rise.

It’s not a question of aiming for inflation – but aiming for growth, knowing that modest inflation comes with growth, and posting guards to ensure that the inflation does remain only modest.

Michael Prescott

My understanding is that with a few brief exceptions, like the early nineties, house prices have outstripped wage inflation, making it harder for first time buyers to get on the property ladder. My point was that it was this increase in perceived wealth for property owners that created the spending boom, more than small decreases in mortgage payments, as people spent virtual gains they thought they had made from property ownership.

As for your comments about my “self-indulgent” “folly” of “deflation as a cure for consumerist ills”, this gets to the heart of a really important question that Thus needs to keep an open mind on if it is going to make an interesting contribution. What makes politics uninspiring to young (and old) nowadays is the consensus which I could describe as Blair-Cameron, but which almost every main stream politician has bought into that says economic growth is good; spending is good; without any regard to the ever-increasing consumption of the world’s resources. For example – the third runway at Heathrow must happen because it will create jobs and it will create vast acres of new shops for BAA. Any environmental, ecological concerns are trumped by the economic growth card.

I was not saying deflation was a cure for consumerist ills, I was saying that a bit less consumption would be good for the planet. How can we preach reducing emissions to the rest of the world if we are always pressing on the consumption accelerator as hard as we can?

Peter West