OMG No Not Deflation!!!
God this seems so obvious, why can't they see that there is no deflation threat? As I've said from the beginning, evaporation of made-up capital that should not have been made-up in the first place and deflation are two completely different things, why is it so difficult for these Fed geniuses to see that?
Oh well. Duck, it's deflation!!! Quick, let's buy more Treasurys!!
Federal Reserve Bank of St. Louis President James Bullard said the central bank should resume purchases of Treasury securities if the economy slows and prices fall rather than maintain a pledge to keep rates near zero.
“‘The U.S. is closer to a Japanese-style outcome today than at any time in recent history,” Bullard said, warning in a research paper released today about the possibility of deflation. “A better policy response to a negative shock is to expand the quantitative easing program through the purchase of Treasury securities.”
I think the Fed's easy money policy is more dangerous than the specter of deflation at this point, at least until the economic rocket scientists get together and redefine what we are currently experiencing.
Until that happens, I guess we'll just keep shoveling money into the hole and hope that works.