The Latest Bernanke

See this latest Ben S. Bernanke speech on “An Unwelcome Fall in Inflation?“, writes George R. Zachar. “Not only does he rehabilitate the Phillips Curve, but there is this gem: ‘... in a situation of insufficient aggregate demand, deflation or very low inflation might prevent the Fed from achieving full employment, at least by means of the Fed’s traditional policy tool of changing the short-term nominal interest rate...’ I read this as saying deflation threatended THE FED’s toolkit, not necessarily the economy.”