Europe's best defence against deflation

ARTICLE - Many people are worried about deflation. Severe deflation, as in the early 1930s, is catastrophic; mild deflation, as in Japan today, could become self-reinforcing. There are, moreover, similarities between early 1990s Japan and parts of Europe today: depressed equity prices, banks under pressure and weak consumer confidence. We are right to worry.

Originally published in the Financial Times UK edition by Adair Turner, vice-chairman of Merrill Lynch Holdings, 4 November.

But confidence

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