What can the fed do to fight it? Well have to start printing money for real instead of just injecting liquidity... Inflation levels are dropping like a rock at the moment. http://www.shadowstats.com/alternate_data/inflation-charts
I am more referring to monetary inflation/deflation... Not commodity. They are interlinked, but not as correlated as most people seem to think.
you sure about that? The price of oil has nothing to do with it? If they close the straits, I doubt you will be very concerned about defalation. And for that matter, if it doesn't ever rain again, we will all have to rethink CPI ex food and energy of all the things to worry about, deflation is way down on my list I can think of a lot better things to worry about, but not at the moment GDP is growing Money is not tight Rates are low and no inflation in sight some people just aren't happy unless they have something to worry about and it is hard to sell a newsletter when all you have to say is "Everything is OK"
No deflation in the overall economy. The Fed can not fix the economy with monetary policy, but one thing they can do is prevent deflation. And they will. A decrease in the inflation rate is not deflation, it's just less inflation.
Well... If you want something to worry about. Worry about the EU. If they don't get things together this week we could see the breakup of the EU begin or end of the euro within a month. Breakup begins, countries go under... Banks blow up. Derivatives spread the damage like interlinked cluster bombs... Entire world banking system goes belly up within a weeks time and all that is left after the implosion is around a third of the entire system if were lucky. That is why Bernanke and Geitner are getting so desperate to talk some sense into the EU. If they keep things together we can buy more time before it's Armageddon and all we have left is our assault rifles, gold, and silver...
Would be surprised if anything like that occurs. More likely, markets rally on "ECB money pump"... just like they have in the US. Faith in ECB likely to keep any crisis at bay for 2-3 years or longer.