Inversion

Not only actual inflation, but measures of inflation expectations such as the 5 year TIPS spread are falling. The Fed is on the horn right away:

*BULLARD SAYS INFLATION IN U.S. HAS `SURPRISED TO THE DOWNSIDE’
*FED’S BULLARD SAYS LOW INFLATION MAY WARRANT PROLONGING QE
*BULLARD SAYS HE’S STILL OPTIMISTIC U.S. INFLATION WILL RECOVER

Inflation will recover? Please. Inflation is bad, not good. The Fed’s mandate is stable prices, not steady inflation. Mild deflation is a sign of a healthy economy, because it means productivity is rising with a stable money supply. These guys are so confused by their manipulations that they no longer know which way is up. Instead of focusing on helping to build a healthy economy, they are focused on trying to inflate away the horrible debts that their past policies have created.

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