US acts against its own convictions

The Federal Reserve's new monetary stimulus aimed at combating the downturn and deflation could have serious negative repercussions, writes the left-liberal daily La Repubblica noting the danger of inflation: "Consumers are enjoying the price cuts [of deflation]. The euphoria leads to a logical decision. Spend even less in expectation of further reductions which make you even 'richer'. A fatal signal for companies. The consumer strike slows investment and blocks new employment. ... Like sorcerers' apprentices, the bankers of the central banks are forced to perform yet more magic. They must generate inflation at any cost. This is precisely the opposite of their institutional mandate for half a century. Being forced to act against their nature explains the slowness of their reflexes and also their restraint. ... It [the Fed] is forced to inflict damage on themselves. It has realised that the danger today is no longer rising prices. But the irony is that instead of healing, the US the cash flow issuing forth from the US's central bank encourages inflation in other countries with strong growth."

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