The end of 2008 was a massive disinflationary period as the inflation rate fell from lofty heights until in January 2009 the inflation rate had fallen in both the U.S. and Japan to about zero. Deflation followed as the rate fell below the zero line through July. But then the two countries started diverging as the massive trillion dollar bailout began kicking in in the U.S. It kicked the U.S. inflation rate up to almost three percent before petering out. The inflation rate stayed negative (deflationary) in Japan however as prices continued to fall by 1% to 2% per year, which is probably where the U.S. would have been without the trillion dollar stimulus. Inflation in the U.S. currently … [Read more...]