One of the reasons to get the stimulus package through Congress very fast–without tax cuts, I might add–is this, from The Wall Street Journal:

U.S. consumer prices barely rose last year by their slowest pace in over a half century, a government report showed, a stunning turn just a few months after inflation hit 17-year highs.

Much of the reversal was due to a roughly 75% decline in oil prices from their July peak that has in turn brought prices down for everything from gasoline and home heating to airline fares.

But some of inflation’s disappearance is also a consequence of the severe economic recession that is causing nervous households to delay spending, which in its worst form could lead to the type of deflationary spiral that gripped Japan in the 1990s. [emphasis added]

   Out-of-control inflation isn’t a good thing but what is happening now is even worse: a possible deflationary cycle. Yeah, you would like prices to be lower. But, when prices drop, people also lose their jobs because companies aren’t making money–and, yes, companies to have to make some money to pay people…weird how that works, huh? And as I predicted way back last year, we are heading into an even rougher patch, I think, partly because retailers are going to go belly-up after people couldn’t buy much at the end of the year–even when prices were lower and sales were all over the place.