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Tuesday, August 10, 2010

Fed to Discuss Stalling Recovery

“The Federal Reserve will meet on Tuesday faced with a pivotal decision about whether to abandon its presumption that the economy is gradually picking up steam and begin to consider new steps to keep the recovery from sputtering out. A string of developments, including the weak jobs report last Friday, has altered the sentiment within the central bank, leading Fed policy makers to stop worrying for the moment about the increasingly remote prospect of inflation. Instead, they are increasingly focused on the potential for the economy to slip into a deflationary spiral of declining demand, prices and wages.” (New York Times, Tuesday)

Unclear health insurance “reform,” yet-to-be determined financial regulations, possible new energy restrictions – is it any mystery the economy won’t recover?

FEE Timely Classic
“Deflation: The Good, the Bad, and the Ugly” by Steven Horwitz