Inflation hawks and doves prepare for battle. The ECRI leading indicator of U.S. economic performance dropped by a rate unmatched in half a century. The Telegraph reports that Ben Bernanke plans to double the Fed's balance sheet to counter deflationary pressures. He and his allies fear resistance by inflation hawks, led by Thomas Koenig (Kansas Fed). Here the beginning of a possible thriller:
Ben Bernanke needs fresh monetary blitz as US recovery falters
Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.
Fed watchers say Mr Bernanke and his close allies at the Board in Washington are worried by signs that the US recovery is running out of steam. [...]
HT Scott Sumner