{"id":28375,"date":"2015-03-24T13:54:56","date_gmt":"2015-03-24T13:54:56","guid":{"rendered":"http:\/\/www.taxresearch.org.uk\/Blog\/?p=28375"},"modified":"2015-03-24T13:54:56","modified_gmt":"2015-03-24T13:54:56","slug":"those-who-say-we-will-only-have-deflation-for-a-few-months-are-denying-the-facts","status":"publish","type":"post","link":"https:\/\/www.taxresearch.org.uk\/Blog\/2015\/03\/24\/those-who-say-we-will-only-have-deflation-for-a-few-months-are-denying-the-facts\/","title":{"rendered":"Those who say we will only have deflation for a few months are denying the facts"},"content":{"rendered":"

George Osborne has claimed 0% inflation in the UK is good news this morning<\/a>\u00a0and that this wholly unintended circumstance is part of the Tory economic plan.<\/p>\n

He is profoundly wrong. First, he never predicted or wanted this. Second, whilst it is true that if zero inflation lasts for a few months then it is true could create a short term consumer boom in this country that is not true after that time period.<\/p>\n

As it continues people realise they will not be getting pay rises so they reduce spending.<\/p>\n

And business decides not to invest as it will be cheaper next year.<\/p>\n

And household debts go up in value as they are fixed in monetary terms.<\/p>\n

And real interest rates increase too as they are always positive but the fixed obligation goes up in real terms as the value of money falls.<\/p>\n

And suddenly we are in recession, for maybe decades.<\/p>\n

The word is zero inflation and deflation will only last a few months so we need not worry. But look at this graph<\/a>:<\/p>\n

\"Screen<\/a><\/p>\n

If you can see sign of a flattening trend at the right hand end, or of imminent reversal with marked upward movements in rates imminent then I suspect you are a fantasist.<\/p>\n

We are heading for serious deflation and that requires serious and rapid action to address it.<\/p>\n

Staring with green\u00a0quantitative easing and the delivery of the Green New Deal would be a good start.<\/p>\n

But I am not hearing that message. And that's worrying.<\/p>\n","protected":false},"excerpt":{"rendered":"

George Osborne has claimed 0% inflation in the UK is good news this morning\u00a0and that this wholly unintended circumstance is part of the Tory economic
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