Out of control inflation or controlled deflation?(ZT)

Out of control inflation or controlled deflation?	smokey	NEW 6/25/2007 6:59:25 PM
As the economy slips into recession, the Fed finds itself unable to directly affect the economy through the printing press. Weare now seeing the downside of 0% real interest rates on the economy.Easy credit never stimulated the economy directly, but indirectly bycreating a housing bubble upon which the financial sector greatlyprofited. But 0% interest rates also stimulated commodity and energy bubbles and investment in the Asian manufacturing sector. Inflationin commodity and energy prices had a benign effect on the economyduring the housing boom due to the wealth effect of asset appreciation.However as the housing boom begins to bust, this inflation in theprices of necessities will limit consumer's spending on nonessentialsupon which a service/retail economy depends. The investment in Asian manufacturing has eliminated the better paying jobs and businesses in the economy. Theprinting of fiat after the last recession has done nothing to stimulatethe real economy but has simply sown the seeds for the next recession.How would the printing of fiat now profit anything but the financialsector? Interest rates are already too low to control therunaway credit in the financial system. To drop them now would onlyexacerbate commodity and energy prices which would further cripple theeconomy due to runaway price inflation for the necessities of life. So,since the Fed cannot control inflation, and any further stimulationwould only cause hyper-stagflation, it seems that the only choice theyhave is to try guide the economy through the liquidation process ofdeflation. So what if the Federal Reserve Banks are the only banks left standing? So what if the Fed owns thousands of McMansions? So what if the government declares bankruptcy? What is the alternative? Fed Governor smokey votes for controlled deflation.