"The U.S. government has a technology, called a printing press"

That's what Bernanke said in a speech on how to avoid deflation "and the special problems that entails." That was back in 2002 when deflation was an actual worry. This is the link:

http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021121/default.htm

I think it's a good speech and in general, I think Bernanke is very smart and understands what the problems are and what needs to be done. I agree that, in the short term, liquidity is needed, and that the Fed is doing the right thing to inject loads of it into the system. I am worried about a) the way it's done and b) what to do in the aftermath. B/c this much liquidity will come around and have an inflationary impact -- and possibly create another bubble. I mean, isn't that what Greenspan did, when he lowered interest rates so dramatically back when?

Aaaaaanyways, the speach has some policy measures in it to combat deflation. I'm too lazy to reformulate them all myself so here's what my sales coverage at Goldman sent me:

"The steps in short summary:
1. Use the discount window aggressively to lend to banks (done)
2. Cut rates early and fast when growth and inflation slow (done)
3. Push for fiscal stimulus (done, more to come)
4. Pre-commit to zero or close-to-zero rates for some time (likely in Dec)
5. Target the treasury yield curve and flatten it by buying longer-dated
treasuries (GS forecast for 2009)
6. If credit doesn't expand, buy agency debt (*new* done today)
7. Start printing $ by having Treasury buy risky US assets (incl equity)
8. Start printing more $ by having Treasury buy foreign assets to get the $
value down and create export stimulus"

Interesting. Prescient.