Legal Commentary

Fed Member Warns Of A Lost Decade

By Big Tent Democrat

New York Times:

On Thursday, James Bullard, the president of the Federal Reserve Bank of St. Louis, warned that the Fed’s current policies were putting the American economy at risk of becoming “enmeshed in a Japanese-style deflationary outcome within the next several years.”

[. . .] Mr. Bullard had been viewed as a centrist and associated with the camp that sees inflation, the Fed’s traditional enemy, as a greater threat than deflation. But with inflation now very low, about half of the Fed’s unofficial target of 2 percent, and with the European debt crisis having roiled the markets, even self-described inflation hawks like Mr. Bullard have gotten worried that growth has slowed so much that the economy is at risk of a dangerous cycle of falling prices and wages.

It may be late, but if the Fed is prepared to understand the dire straits of the economy, that is welcome news. Now, if only the Congress and the President could join the battle to save the economy.

Speaking for me only

Full post as published by TalkLeft on July 29, 2010 (boomark / email).