Sterling Slide is Painful but What We Need in a Global Deflation Crisis

The pound has had a spectacular fall but it is not such a bad thing in a deflationary world of currency wars

by Ambrose Evans-Pritchard

Britain faces a frightening array of economic risks if Parliament makes a mess of Brexit, but a sterling crisis is not one of them.

A weaker exchange rate acts as a shock absorber. It cushions the downturn to some degree and strengthens our buffers against deflation. Those fretting about the inflationary risk of a lower pound are stuck in a timewarp, or living on the wrong planet.

Global bond yields are touching historic lows every day and signalling a deflationary depression into the next decade. This is not like the 1930s. It is worse.

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