Letter: Economic policy then and now
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Sir: The circumstances accompanying the financial crisis of 1931 are more complex than Professors Little and Scott allow (letter, 12 October). They rightly point out that the policy of balancing the budget in September 1931 did not prevent Britain going off gold. But it can certainly be argued that going off gold with a balanced budget, and a commitment to balanced budgets, was crucial in restoring business confidence,
allowing interest rates to fall and producing the housing boom that led the recovery from the depression.
Keynes attacked the policy of balanced budgets in a depression. However, he accepted that 'conservative finance' might be psychologically necessary as a temporary measure once the pound had been floated, in order to secure the lower long-term interest rates to which he attached supreme importance, even though by itself it was a 'depressing influence'.
The other difference between 'then and now' which your correspondents ignore is that in 1931 retail prices fell by 7 per cent, whereas now they are rising by 4 per cent per annum. This makes the inflationary risk of expansion much greater now than then.
Yours sincerely,
ROBERT SKIDELSKY
University of Warwick
Coventry
12 October
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments