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Yup...still no inflation...and still record low interest rates...
February 8, 2012 1:21 AM

..and all because of the lack of demand in our economy:

Procter & Gamble Co.'s failure to raise the price of Cascade dishwashing soap shows why investors are buying Treasuries at the lowest yields in history, giving the Federal Reserve more scope to boost the economy.

The world's largest consumer-products company rolled back prices after an 8 percent increase lost the firm 7 percentage points of market share. Kimberly-Clark Corp. started offering coupons on Huggies after resistance to the diapers' cost. Darden Restaurants Inc. (DRI) raised prices at less than the inflation rate as patrons order more of Olive Garden's discounted stuffed rigatoni than it anticipated.

Low inflation has continued to boost demand for Treasuries, keeping rates low as President Barack Obama finances a $1.1 trillion budget deficit to boost an economy still growing at rates below the 20-year average. The Fed set an annual inflation target of 2 percent two weeks ago, and policy makers suggested they may conduct a third round of bond purchases under a policy known as quantitative easing.

"Any way you look at it, the Treasury market is still expecting rather benign inflation, and we will be in a low-rate environment for some time," David Ader, head of U.S. government bond strategy at CRT Capital Group LLC in Stamford, Connecticut, said Feb. 1 in a telephone interview.

"This recovery has not been a great recovery with regard to income gains, and income gains are a function of both growth in wages and jobs," Jeffrey Rosenberg, the chief investment strategist for fixed-income at BlackRock Inc., the world's biggest money manager, said in a Feb. 1 interview in New York. "Why can't you pass price increases through to consumers? It's because consumers aren't seeing income gains."

Where's all the hyperinflation conservative economists are so afraid of and why are they so hyper-anti-keynsian?

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