With commodity prices plummeting will we see deflation in the U.S.? According to this article the only thing that might prevent it is the Federal Reserve inflating our currency. Don't worry though, we'll probably have a nice bout of inflation in a few years.
By Alister Bull
WASHINGTON (Reuters) - Plunging commodity prices could drag U.S. inflation below zero next year and the Federal Reserve will have to stay alert to the risk of a damaging deflation that could erode the economy even if it worries that low interest rates could spark inflation over the longer term.
The Fed's emergency action to offset the credit crisis has included slashing interest rates to 1.5 percent and pumping well over $1 trillion into financial markets, which has doubled the size of the Fed's balance sheet and sent the U.S. money supply soaring.
Read the rest of the article.
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