Over the past few weeks, there has been an escalated debate about whether or not the United States will fall into a period of deflation. Deflation is negative for the economy.
The three tools that can be used to halt deflation are: 1) Lower the fed funds rate to 0%. 2)Increase the number of dollars in circulation, which is the equivalent of raising the prices in dollars. 3) A Broad based tax cut.
The Federal Reserve has already pegged the fed funds rate at 0%-.25%. We will have to wait and see if the other two options come into play. Maybe they will after the November elections.
