Unusual worry for economy: Is inflation too low?

Classic headline designed to confuse the issue at hand. Inflation/deflation is a product of confidence of nation's debt and fiscal management. When gold is tied to the circulating currency and confidence wanes, deflation is the end result. When it's not, the end result is an increased velocity of money - i.e. get rid of the stuff before it devalues further. This is currency-driven or cost push inflation. As long as confidence in a nation's debt and fiscal management deteriorates under a fiat monetary system, something we are seeing right now across the globe, inflation is inevitable. To suggest that inflation is too low is an effective misdirection tactic.

It might seem like prices are rising wherever you look, from medical care to college tuition. Yet to the Federal Reserve, they might not be going up fast enough.

The Fed says a little more inflation might be just the thing to start a chain reaction that would ultimately create jobs -- and avoid a spiral of falling prices that could damage the economy.

Source: finance.yahoo.com