Monday, December 06, 2010

Fiscal Policy or "Fantasy Football"?

I watched Dr Ben Bernanke's interview on "60 Minutes" this weekend, and I was struck my the Federal Reserve chairman's candor with regard to the possibily of deflation in today's economic environment. Yet, austerity hawks around the US are continuing their calls for fiscal policy measures that address the risks of inflation, which remains essentially non-existent today. From where I sit, calls for anti-inflationary measures are akin to playing "fantasy football" against a non-existent threat. If Dr Bernanke's views are accepted at face value, then the US is at risk of deflation and depression in the near-term, and that is the threat that our nation's fiscal policy-makers should be actively engaging...

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