The threat of deflation

November 20, 2008 2:20am

I attended the Cato Institute’s annual monetary conference. The Fed’s vice-chairman, Don Kohn, gave the keynote address, and used it to emphasise that the central bank would not let the economy fall into a deflationary spiral (speech; Krishna Guha’s report). The BLS released inflation figures for October, showing a seasonally adjusted drop in the CPI of 1 percent, the biggest since 1947. Even core inflation was negative last month. Stockmarkets crashed again. I suppose Cato should be congratulated on its timing.