Alright listen, I don't want to be accused of being a doom-and-gloomer so let's start with the good news. Inflation isn't a threat at the moment, in fact, we're seeing the reverse and somehow that's supposed to be good news. If you ask me, experience beats the hell out of watered-down government and quasi-government statistics and I don't ever recall burning through a paycheck in such a short amount of time but hey, maybe I'm on crack and the Fed is totally right? Sure. I buy that.

Anyway, lookie here, a chart! Our friend Sold at the Top from Paper Money is much more of a chart ninja than I can claim to be (we're all about the LOLZ and the Fedbashing here at Jr Deputy Accountant) but here's one anyway.

Clusterstock:


Counter this with this latest St Louis Fed release on interest rates, inflation, money supply, and lots of other exciting little bells and whistles that frankly made me feel like throwing up just upon remedial glance. Wheeeee, we're up and whooooooa we're down and OMG look out that M3 is going to biteyourfuckingheadoffOMG!!! Yeah alright, we're being overdramatic as we are wont to do but no matter which way you look at it, it appears as though the deflationistas were right.

Were they?

Well yes, sort of. So the really good news is that if you do not need food, shelter, or oil, congratulations! You just scored huge and your dollars are doing just as well if not better than before.

If, however, you're one of those suckers who needs to eat, put a roof over your head, or keep your ass warm (don't worry, we'll take a cue from Weimar before too long and start burning bucks in the fireplace), sorry but this ticket is not a winner. Thanks for playing and good luck next time!

At least the easy money keeps coming, with the Fed likely to make ZIRP a tradition over at the Board. Ha, syke! You didn't really think they'd raise rates now, did you? Please.

Says FRB St Louis:

The median path implies an FFR that stays near zero through 2010:Q3. Even so, there is considerable disagreement among the survey participants. Some forecasts imply that the FFR should be a bit above ½ percent already and rise to nearly 5 percent by mid-2010. And if a negative FFR were feasible, other forecasts imply that the FFR should be as low as –5 percent in mid-2009 before rising to nearly –3 percent by mid-2010.

It’s easy to speculate about the reasons for such a wide range of FFR predictions. For some forecasts, a large and persistent output gap requires low interest rates to stimulate growth. For others, the huge expansion of the Fed’s balance sheet requires higher interest rates to moderate future inflation. Not surprisingly, the high degree of uncertainty about the overall economy implies a similar degree of uncertainty about when the FFR will again be a primary tool of monetary policy.

I am still with the pro negative interest rate camp and find it incredibly endearing that St Louis Fed researchers claimed this was not "feasible" - what's to stop them? Certainly not Congress nor that pesky Constitution all the Republicans are always babbling about.

Meanwhile, the Fed used CPI numbers as an excuse to buy $7 billion in 10-year T-bills while no one was watching. $175 billion and counting in QE.

Reuters on the hot CPI action:

U.S. Treasury debt prices climbed on Wednesday, after smaller-than-expected May rise in consumer prices pared worries over inflation emerging soon,

Some investors have feared that inflation could surge in the months ahead due to a resurgence in commodity prices, the government's economic stimulus spending, and the increase in the money supply as a result of the Federal Reserve's monetary policy of "quantitative easing".

This week's signs of tame inflation, including Tuesday's report on producer prices, should buy the Fed time for its quantitative easing measures -- notably buying Treasuries and mortgage-related securities -- to work without stoking inflation.

"It puts the inflation fear-mongering behind us," said Michael Wallace, global market strategist with Action Economics LLC in San Francisco.

The government's Consumer Price Index, its broadest inflation gauge, rose 0.1 percent last month, below an expected 0.3 percent gain. This resulted in the biggest year-over-year drop since 1950.

The CPI core rate, which excludes volatile energy and food prices, was up 0.1 percent, matching analyst forecast.

So the good news, again, is that if you can avoid eating, driving, riding the bus, flying in airplanes, heating your home, and any number of energy-sucking activities, you're golden.

Lest I be accused of being a depressing read and all.