We haven't wavered in asserting that the markets had it all wrong about an impending Fed rate hike. We said it simply wasn't in the cards, despite the fact that bond traders were recently pricing in a 75 percent chance of tightening by November. Our reasoning was that the U.S. economy is much too frail right now to saddle with higher interest rates, and that any move toward tightening could turn an already staggering housing bust into a full-blown disaster. Deflation is still developing at this point, its effects limited mainly to an imploding real estate market and a dramatic downturn in financial speculation. But just one turn of the screw by the central bank would affect a much broader swath of the economy, possibly triggering a collapse that would be unstoppable. That point of view is still well outside the mainstream, since it is rampant commodity inflation that has been troubling consumers and economists. But does the Fed chairman secretly shares our fear of deflation? Quite possibly, according to a recent report by Washington Post political columnist Robert Novak. 'Speculation that the Federal Reserve is about to begin inflation-fighting interest rate increases appears to be dead wrong,' writes Novak. 'Fed Chairman Ben S. Bernanke is worried more about runaway oil prices contracting the global economy than inflating it with a wage-cost spiral. According to sources close to him, America's leading central bank has no plans for a raise.' If Novak's sources are correct, it would increase our respect for Bernanke. Not that one has to be a genius to see that the commodity inflation now ravaging consumers around the world cannot go much farther without killing the demand for the commodities themselves. Take oil. Some are predicting that the price could continue to rise, reaching $200 a barrel before
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