The Bernanke Dollar Call

By Joseph Trevisani, Chief Market Analyst FX Solutions The spectre haunting Federal Reserve monetary policy is the fear of deflation. A prolonged period of falling prices presses down on both the productive and the consumption sides of the economy. Businesses lose pricing power and face shrinking revenues even if they maintain sales levels. Consumers, frightened by job losses and discouraged by the collapse in family wealth postpone purchases, particularly of large items like homes and cars. Businesses with falling revenues fire workers, who buy less and in turn business production takes another leg down and employment follows. Historically deflation is rare and associated only with... Full Story