Large deficits don't cause inflation: Fed's Yellen

http://www.marketwatch.com/story/la...e-inflation-feds-yellen-2009-07-28?siteid=rss

 

Oh, well that solves everything..

 

this is the problem there is so much debt that if the interest rate rises it will cause economic meltdowns. so it is a lose lose situation.

 

Well, thank you Ms Yellen for stating the obvious.

If you look back in history, it's clear that deficits and inflation have little correlation. But, I would think all this "stimulus" will be inflationary down the road, though. Considerng the amount of stimulus we are seeing, if we don't get inflation that will be a clear sign the stimulus is not working. What then?

Deflation.

 

Inflation vs Deflation?
I guess we'll find out in 2 yrs, or less.

 

I'm not sure thats clear at all. If you look back at government spending it does correlate to CPI. One of the few people who claims deficits fuel inflation and whose opinion is worth something is John Hussman, hes got a chart in his website. I'm yet to fully understand his theory but the correlation does exist

 

Another reason to be afraid - this is the bimbo that could very well take Ben's place if he isn't reappointed.

 

Spending? Yes. Deficits? Not so clear to me. The question was about deficits.