Britain: Too Much Deflation?

Britain's deflationary policy may be turning out to be all too stringent. Through high taxes and credit restrictions, Prime Minister Harold Wilson is trying to reduce consumer spending and raise exports and investments. But Wilson realizes that it is hard to cut consumer spending without simultaneously drying up investment—because in large part, investment is a response to demand. The country, headlined the Guardian, appears to be HEADING FOR A DEEP RECESSION.

So far, the main effect of the three-month-old Wilson squeeze has been to pinch vital private capital investment much harder than most Britons had expected. The government's Board...

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