"The [Fed] threw open its coffers to strained overseas credit markets, taking further steps to stem the global financial crisis. The U.S. central bank said Monday it would provide unlimited dollars to the European Central Bank, Bank of England and Swiss National Bank, allowing them to relieve pressure on commercial banks across their regions. Dollars have become elusive in recent weeks as short-term money markets around the world deteriorate. ... The U.S. previously had extended $620 billion in currency swaps with foreign central banks, which provide the funds in exchange for collateral from commercial banks", WSJ, 14 October 2008.
"In a financial world gone haywire, market indicators often send mixed signals. ... One gauge of market inflation expectations reflects this new paradigm: The spread between yields on 10-year Treasury inflation-protected securities and the 10-year Treasury note has shrunk to less than one percentage point, the lowest since 1998", Mark Gongloff at the WSJ, 16 October 2008.
I agree with Gitliz who is chief economist of Trend Macrolytics.
Deflation, I just can't see it.
Haywire indeed. Is there anyone who believes inflation will average 1% for the next ten years?