Thursday, July 29, 2010

Paging Paul Krugman

My econ is a bit rusty and I was never much of a macro guy, but is there any way in which this reasoning makes any sense at all?
“I think the fear of deflation in and of itself is probably overblown, from my perspective,” Charles I. Plosser, president of the Philadelphia Fed, said last week in an interview. He said that inflation expectations were “well anchored” and noted that $1 trillion in bank reserves was sitting at the Fed. “It’s hard to imagine with that much money sitting around, you would have a prolonged period of deflation,” he said.