I just read from BBC Website.Brown said the economic "dogma" that had dominated the past 20 years was over as deflation - rather than inflation - was now the biggest threat to the economy.
Brown has eulogised about low inflation in the tenure in office ,he can't have it both ways.
Take a elderly saver like me saving £1000 with a 3 year saving guarantee of 5.75%(20% tax)4.6% net.
Scenario one..
Inflation at say 5% over 3 years
Savings after 3 years £1144.45
15.76%inflation
Value of my cash £988.64 may benefit the economy but not me.
Scenario two
2.5% deflation
Savings after 3 years £1144.45
7.689% deflation
Value of my cash £1232.44 may not benefit the economy but would be to my benefit
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