So all the hurrah about low inflation from Osborne is followed by news that BP is cutting hundreds of jobs because of falling oil prices and the prospect of them staying low. This is the reality of a deflationary spiral and it could easily issue into a slump as personal indebtedness combined with low wages destroys demand. On radio 4 this morning the question was asked as to why deflation is so bad because Japan has been in it for 20 odd years. The point now is that it is a global phenomenon rather than just national. Aggregate global demand will slump and affect all of us.
Behind the Spreading Butter Comes the Knife