Finally someone mentions deflation and collapsing monetary velocity... Deflation is far, far, far worse than inflation. Deflation is what Bernanke fears most and why the fed won’t tighten too fast.
“There’s a term in chess called zugzwang,” writes Michael Sivy at Time, “which describes the point in a game when it’s your turn to move but every move you could make would worsen your situation. That’s pretty much what the chessboard looked like for Ben Bernanke this morning.”’
"“A premature tightening of monetary policy could lead interest rates to rise temporarily” Mr. Bernanke pontificated, “but would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further… High rates of unemployment and underemployment are extraordinarily costly…”
Deflation is also inevitable - Bernanke is trying to push back a boulder with borrowed money. Eventually interest rates WILL rise, and when that happens, he’ll have the choice of deflation or hyperinflation.