Deflation Warning

By Douglas V. Gibbs

James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the Federal Reserve's current policies may be putting the American economy at risk of becoming "enmeshed in a Japanese-style deflationary outcome within the next several years."

This warning comes on the heals of one by Ben S. Bernanke, the Fed chairman, who said the central bank was prepared to do more to stimulate the economy if needed, though it had no immediate plans to do so.

As the economy continues to weaken, the views by the Federal Reserve seems to be more in line with reality than the opinions of the Democrats in Congress, or Obama's White House. Rising inflation due to the continued spending of money we don't have is on the horizon, and though some would consider it a greater threat than deflation, the powerful economy killer of deflation is becoming more of a future reality than the politicians are willing to admit.

-- Political Pistachio Conservative News and Commentary

Within the Fed, Worries of Deflation - New York Times