Inflation and deflation in this levered world coexist nearly side-by-side,
The Fed knows that the economy is in terrible shape and that they must bring down short-term rates to the level of inflation. If inflation keeps coming down, the Fed, to a certain extent, has to chase inflation.
So, the lower inflation goes and the more and more investors believe that inflation will stay low, the better it is for the bond market.
We think that inflation will be benign and may come down from these levels.
I view him favorably, especially his views on inflation targeting,