Deflation

Why a Little Inflation Is a Good Thing for Americans

Inflation has inched higher in the past six months, but that's not a danger sign, but rather a harbinger of improving economic conditions and a strengthening recovery. And that, in turn, should lead to higher wages and more hiring in the year ahead.

The Real Problem With Inflation Isn't on Wall Street

As earlier bouts of alarmism over Europe, then a double-dip recession and then deflation fade away, a new bogeyman is taking their place: Inflation, and the damage it could do to profits and stocks. Yes, prices are rising, but the main pain will be felt worst among America's poorest.

Currency Wars: How Ben Bernanke Outsmarted China

After years of exhorting China to increase the value of its yuan, the currency is finally rising: It has appreciated some 3.5% since June while China battles inflation and works to cool its red-hot economy. Here's how the Fed managed to succeed where political wrangling fell short.

Sweden's Central Bank Is Fighting the Next Bubble

While most of the world's central banks are still fighting the last war, Sweden's Riksbank has moved on to the next one. Rather than looking at conventional inflation gauges, the world's oldest central bank is basing its actions on asset-price growth in an effort to prevent the next bubble.

Why Gold Rose 420% in Eight Years: Blame It on the ETF

Gold is on a record bull run, up from $328 in 2002 to $1,375 an ounce today. What caused that steep rise wasn't any inherent increase in gold's value to society, but a clever marketing scheme that allowed it to be traded easily without the hassle of physical delivery: The SPDR Gold ETF.

Markets Are On the Rise Since the Fed Launched QE2

Republican leaders may be worried about the Federal Reserve's second round of quantitative easing, but the stock and credit markets are not: They have improved significantly since the QE2 plan was announced, Bloomberg reported Friday. But can that rally be solely attributed to QE2?

Will a Rising Dollar Hammer Down Gold?

A rapidly growing list of reports shows a U.S. economic recovery that's far stronger than most had anticipated just months ago. And both deflation and inflation seem less likely to explode. All this is boosting the dollar -- and could soon dim the gold bugs' argument.

Citing 'Insufficient' Growth, Fed Keeps Policy Steady

The Federal Reserve Tuesday kept its current accommodative monetary policy going steadily and continued its program of quantitative easing, saying that the economic recovery is continuing, but the growth rate "has been insufficient to bring down unemployment."

November's Producer Price Rise Aids the Deflation Fight

Led by a jump in energy, producer prices rose 0.8% in November -- a gain that suggests policymakers may be winning their battle to avoid deflation. It's the straight monthly rise. However, minus energy and food increases, inflation pretty much vanishes.

Gary Shilling on The Age of Deleveraging

Economist Gary Shilling, who correctly predicted the financial collapse, just released a new book, The Age of Deleveraging which explains why inflation is not what investors should be fearing, but rather deflation. Shilling also gives ten investments investors should now make.

The Fed Sees a Slower Recovery and Jobs Rebound

In its latest meeting minutes, the Fed said it now expects the U.S. economy to grow more slowly in both 2010 and 2011, with as many as six years needed to return unemployment to normal levels of 5% to 6%.

Should the Fed Worry About Unemployment?

When the economic gurus at the Fed move the levers of U.S. monetary policy, they do so with two often-conflicting goals in mind: promoting maximum employment and keeping prices stable. Many critics are now arguing that that Fed should ignore unemployment and focus solely on prices.

Philly Fed Index Hits a High
for This Year

Manufacturing activity in the mid-Atlantic region unexpectedly surged in November, the Federal Reserve Bank of Philadelphia reported Thursday. The Philly Fed's Business Outlook Survey index jumped to 22.5 in November from 1 in October, it's highest reading since December 2009.

Street Smart: Do You Know What Deflation Is?

Nobody likes paying more for goods and services. But deflation has instant emotional appeal: Who doesn't like a bargain? But deflation is a far more serious economic problem -- and, as we found, most folks don't really know why. Do you? If not, no worries: Economist Gary Shilling will explain the reasoning. [Video]

Annual Core Inflation Falls to Record Low

The nation's struggle to prevent deflation is apparently only just beginning. The 12-month core rate (excluding food and energy prices) fell to a record low 0.6% from 0.8% in September. The Fed clearly has more work to do in its battle against deflation.

ING Forecasts Market Growth of 8% to 12% in 2011

ING Investment Management forecasts that stock markets will rise between 8% and 12% in 2011, thanks to a low-inflation, low-interest environment supported by the Fed, despite weak GDP growth. And for those looking for to increase their investment yields, they have a few suggestions.

October's 0.4% PPI Increase: Enough for the Fed?

Producer prices rose less than expected, with much of the increase coming from energy prices. Excluding food and energy, the PPI fell 0.6% in the month. Overall, wholesale prices are up just 1.5% in the past year -- still too close to deflation for the U.S. Federal Reserve.

Diverging Fortunes Create Tension for China, U.S.

The seemingly symbiotic relationship between the China and America -- dubbed Chimerica -- is now clearly chimerical. What was once billed as the ideal partnership is quickly turning into a competition for global influence instead. Investors, beware.

QE2, Day One: Fed Buys $7.3 Billion in Treasuries

Fed Completes First Day oThe Federal Reserve bought $7.3 billion worth of U.S. Treasuries Friday as it started a second round of quantitative easing meant to stimulate the nation's economy, media reports indicate. The plan, designed to boost job creation and prevent deflation, has been highly criticized. f QE2 Treasuries Purchases

Why Asian Nations Hate QE2, and What They Should Do

As the G-20 meets in South Korea, many world leaders have stepped up their complaints about the Fed's $600 billion quantitative easing program, as well as the rapid flow of capital into emerging markets. Some countries are installing capital controls in response, but those won't be enough, says global finance expert Peter Cohan.

Bernanke Defends QE2 Plan to Boost Economy

A day after the the Federal Reserve announced a second round of quantitative easing measures to stimulate the economy, Fed Chairman Ben Bernanke responded to critics of QE2 in a Washington Post op-ed that explained how the bond purchases will work, and why they won't spark inflation.

The Fed Tries Again to Buy Economic Growth

U.S. Federal Reserve today launched the second phase of its quantitative easing program, the so-called QE2, saying it will buy up to $600 billion more in long-term U.S. Treasury bonds to help stimulate a U.S. economy that's growing too slowly.

Weak Income and Spending Data May Push Fed to Move

September's personal income and spending report provided more evidence of a U.S. economy that's suffering from a lack of demand. The poor report will likely support the argument of Fed officials who want to keep interest rates low and employ more quantitative easing.

Inflation? Gary Shilling Says Deflation Is the Real Problem

Perhaps the greatest debate over the economy this year, has been weather the U.S. is in for a period of inflation or deflation. Gary Shilling explains why he believes deflation is the biggest threat and talks about what investors can do to protect their portfolios.