TEXT OF INTERVIEW
Scott Jagow: Today, Japan’s economic minister said he’s worried about deflation. Everybody seems to be throwing that word around these days.
Fortune Magazine’s Allan Sloan is here. I know you’re not worried about deflation. Why not Allan?
Allan Sloan: Deflation is something that happened back in the Depression, and the prices of everything collapsed and then the banking system collapsed. It also would have fed on itself, but that was back in the day when the Federal Reserve board was due and was worried about things like balancing the budget instead of making sure there was enough money in the system to make things work. And if you look at the trillions of dollars the central banks of the world have put into the world financial system, I don’t think you’re going to worry about there being an insufficient amount of money.
Jagow: Yeah, there’s been plenty of that. But do you have a concern that deflation will cause some problems with the economy?
Sloan: The prices of some things will go down. And the prices of commodities are going down. Which is great for you and me, because we’re consumers of commodities, not so great for the farmers. The prices of houses have gone down, though that may finally be stabilizing. So to some extent, falling prices could be a problem. But that’s sort of a localized problem for different markets. The guys in Washington with interest rates now, what, the short-term interest rate is what, 1 percent? And they’re worried about deflation. I mean, they couldn’t be printing any more money.
Jagow: But doesn’t printing money constantly cause problems on its own?
Sloan: Well yeah. That’s why I’m not worried about deflation. To me, the thing I would worry about down the road is inflation, but I wouldn’t worry about it now. Right now, you’ve got to save everything. But you remember when oil prices went up, gasoline prices went up, it’s oh my God! Then the consumer price index has dropped, it’s deflation. I mean, there must be some series of events that people would consider OK, but I can’t find it.
Jagow: Allan Sloan from Fortune Magazine, thank you.
Sloan: You’re welcome, Scott.
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