I don’t think we will see a deflationary recession until inflation – the result of lower rates, a weakened dollar, and rising cost of goods – has played out.
The irony is the FED’s watch on “core” inflation doesn’t include food or energy. Still, goods from China will become more expensive with the dollar falling. This lead(Pb) issue is going to raise testing standards and as a result costs, plus the VAT and increases world demand for raw materials. China’s advantage is in labor costs – nothing else. As their economy grows so does their standard and cost of living = higher wages = higher prices.
I’ve asked the same question about this rate cut, and I see nothing but a NET negative. The government spent future money in the 80’s bailing out the S&L’s and what happened to them? Now we’re spending more money we don’t have bailing out who? A few banks that bought bad mortgages? At the expense of the consumers power to expend, and anyone who has money in a bank.
