inflation-deflation sword fight

With the markets clearly getting concerned about the US$ ($ index
falling this morning to just shy of the important technical level of
80), inflation (with the CRB index now up more than 20% from its lows
and gold just $45 from $1000), and the financial condition of the US
govt and coincident rise in yields, the opinions of those in charge of
the monetary spigot become more important to listen to. There was a
stark contrast between non voting members Plosser and Rosengren in
speeches last night on the issue of inflation. Plosser ‘cautions against
complacency over inflation’ while Rosengren said he’s more worried about
deflation than inflation and he’ll ONLY (bold is my emphasis) worry over
inflation when the economy improves. How the Fed handles the unwind of
their policies, with its impact on inflation and longer term interest
rates, will IMO be the main determinant of the robustness or lack
thereof of any US recovery.

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