Be very afraid
Luc Vallée tells us not to be afraid of deflation, since it provides tax-free returns to investors and punishes irresponsible debtors, including spend-thrift governments (Who's Afraid Of A Little Deflation? – Sept. 5). But he's completely missing the point. Governments strive to avoid deflation not to drive down their debt loads but to avoid economic collapse, as even a moment's reflection on how markets work makes clear: Deflation decreases the expected future cost of assets.
So if I expect deflation, I believe I can get the house I want at a better price if I just wait. If everyone expects deflation, the only people buying valuable assets will be those who don't have the option to wait. Demand will fall through the floor, turning the expectation of deflation into a self-fulfilling prophecy and amplifying the reasons to expect still more deflation.
Worse, this is a trap: Driving demand back up is hard. Interest rates can only go so low before people start keeping their money under the mattress. (Or, more safely in the bank, even at 0-per-cent interest and perhaps paying some fees.)
The only response that's even slightly promising, both theoretically and in actual experience, is to revert to Keynesianism, stimulating the economy through deficit spending by the government – the very thing Mr. Vallée so clearly disapproves of.
Bryson Brown, philosophy professor, University of Lethbridge
Well-paid trades
The Globe and Mail is my valued daily source of information, advice and entertainment. Occasionally, though, I find questionable advice, as in Beg, Borrow, Steal, Sweat and Save Your Way To An Education (Sept. 7). I did just that when I came to Canada at 17 with minimal formal education, and spent most evenings and weekends in academic courses while working full-time.
I wound up with an M.Sc., a professional membership and an adequate income. However, some of the clients I worked for didn't bother with education beyond high school, and concentrated on making money as house builders and then land developers. They are now multimillionaires, while I watch my retirement savings melt down.
Too many parents sacrifice everything to give their children a university education, creating a growing population of unemployable graduates, while well-paid, skilled-trade jobs go begging.
Andrzej Derkowski, Oakville, Ont.
Charity ($10)
I regularly read the Financial Facelift features giving advice to couples and singles on managing assets to ensure the good life and a worry-free retirement. I'm often shocked by how little these people give to others less fortunate then themselves.
Last Saturday's couple (Dig Away At Debt, Or Grow RRSP? – Sept. 5), in their 50s with total assets of $2.15-million, took the prize for self-indulgence. Buried among expenditures on a net monthly income of $13,975 were vacation spending ($500), discretionary ($1,131), dining, drinks and entertainment ($775) and charity ($10). What? Did they buy some Girl Guide cookies?
Winston Churchill has been quoted as saying, "We make a living by what we get; we make a life by what we give." I believe each of us will one day stand before God to give account of what we have done with our talents and our money. How many will hear, "Well done, thou good and faithful servant"?
Yvonne Reynolds, Exeter, Ont.
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