Ben Bernanke and the Fed will decide in a few hours if and how much they are willing to cut its key interest rate.
Some economists speculate that the Fed may take it down to zero percent — an unprecedented move for the U.S. but not for other countries.
Japan tried this policy from 2001 to 2006 in an effort to fight persistent deflation, but the Japanese economy, arguably, has yet to fully recover. It is unsettling to draw such parallels — but hopefully, the Fed, Treasury and other officials have taken note.
To complicate things further, we learned this morning that consumer prices fell for the second-straight month — which could be a signal that deflation could be a real issue here at home. Prices are dropping because demand is waning as people lose their jobs, their homes and much hope of things getting better.
So we should not lose sight of what this show of monetary policy really means — the U.S. and global economy is staggering from one blow after another.
It doesn’t help that we keep printing money to bail out somebody with no real rhyme or reason. Who is the Treasury’s favorite this week? If the Fed lowers rates to zero percent, it is not really something to applaud; it is a reflection of the mess we all are in.
Visit www.armstrongwilliams.com .