Inflation or Deflation? Both? One and then the other?
Looks to me like Bernanke is betting in deflation, and using inflation and currency depreciation to keep it at bay. Now that's gambling.
What's it gonna be HP'ers? Inflation or Deflation?
Ben Bernanke is spooked. That's one explanation for the Federal Reserve chairman's decision to lead the Open Market Committee in yesterday's unprecedented 75-basis- point cut in the fed funds rate.
The Fed spoke of a ``weakening of the economic outlook and increasing downside risks to growth,'' a vague phrase that reminds us that what Milton Friedman said in 1965 is still true: ``We are all Keynesians now,'' monetary and fiscal fiddlers who think the government has a broad mandate to manage the economy.
But what Bernanke was also saying was that he fears a more general contraction of money and credit. If not outright deflation, then disinflation, a slowdown in price increases.