What’s the Real Risk of Deflation?
By Sudeep Reddy

Unemployment is rising, asset values are plummeting and some of the economy’s most common products (beyond food and energy) have seen their prices tumble. The stage is set for a deflationary spiral. So why do professional forecasters put such low odds on a deflation scenario?



The Federal Reserve Bank of San Francisco, in a research note released today, concludes that forecasters are betting on aggressive central bank action. “Forecasters appear to be convinced that the Federal Reserve would not be content with sustained deflation and would take policy actions to restore a positive rate of inflation,” writes John Williams, the San Francisco Fed’s director of research. “This contrasts with the 1970s, when forecasters were concerned that the Fed would tolerate high rates of inflation.”

Give the Fed a win (so far) for a successful communication policy on that front.

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a celkom zaujimavy koment, ktory v podstate hovori o podobnych problemoch ktorym moze FED celit ak pumpovanie penazi prepali a bude mat malo casu na sofistikovanu reakciu.. to sme uz riesili tu