Despite a record-high federal budget deficit and unprecedented levels of liquidity provided by the Federal Reserve, inflation is dead.
U.S. consumer prices were unchanged in October, the lowest reading in five months, suggesting that a price spike over the summer is beginning to fade as coronavirus cases spread.
The flat reading for last month followed a gain of 0.2 percent in September. Core inflation, which excludes volatile food and energy costs, also showed no changed in October, another indication that inflation remains well-behaved, the Labor Department reported Thursday.
The extremely low level of inflation presents a challenge to proponents of mainstream monetary theory, which predicts that a rise in the supply of money would push prices higher. It suggests that the Fed can keep its interest rate target at the current zero to one-quarter of a percent range without sparking inflation.
Perhaps more controversially, the lack of any inflationary pressure