Friday, January 22, 2010
The Yellow River of money
"Meanwhile, to the demands that the first priority of a new British government should be to reduce the fiscal deficit, I can only say: â€œI beg to differ.â€ As Mervyn King, Bank of England governor, has just reminded us, UK output is some 10 per cent below its previous trend. If the recent upturn in UK inflation turns out not to be a blip but a lasting response to sterling devaluation, the appropriate reaction would be to edge up interest rates but let the budget deficit run. This would be the opposite of the conventional wisdom and so probably correct."