Columbia International Affairs Online: Policy Briefs

CIAO DATE: 05/2009

The Fed Battles Deflation and Class Warfare

John H. Makin

April 2009

American Enterprise Institute for Public Policy Research

Abstract

On March 18, Federal Reserve chairman Ben Bernanke intensified the important battle against global deflation with a commitment to expand the Fed's balance sheet by an extra $1.15 trillion. With some luck and persistence, that step could boost growth by a percentage point or more and, even more important, substantially reduce the risk of deflation.