Gavyn Davies talking about the various letter about cut now or cut later:
Inflation or deflation? These are big intellectual differences, with real heavyweights of the profession lining up on both sides. It will take a decade or more to settle this one.
Pity we\’d rather like to know what to do next year though really, ain\’t it?
There won’t be any hyper inflation, you only get that if there are also currency controls in place.
They haven’t settled what happened in the 1930s or 1970s or any time before, between, or after. So a decade is being very optimistic.
Mark, could you explain that to me please?
I don’t understand.
Thanks,
Hugo
These economists frame the debate so that you’ll never achieve a sensible answer. I’m not sure whether this is deliberate or if they’re just stupid but I wouldn’t trust these people to even take charge of the local scout fund.
We need a demand led recovery, and the only sustainable way of achieving that is by systematically lowering costs right throughout the economy. This gives the indebted the chance to repair their balance sheets which simultaneously reduces the risk of insolvency which single handedly crippled the banking system.
So the solution to debt is work, not more debt.
As for hyperinflation, my opinion is that anything is still possible the way we’re going.
“We need a demand led recovery, and the only sustainable way of achieving that is by systematically lowering costs right throughout the economy.”
i see your point chefdave but in ‘lower costs’ we most often find (after 30 years of cost cutting) that the cost to be cut are labour costs, either in absolute number of employees or the wages that they take home. Either way this hinders demand as the unemployed obviously cannot to safford to ahop as much and it hinders govt demand due to less tax take and more transfer payments (dole, sickness etc) paid out.