By Daniel Costello

Rep. Ron Paul, the Texas Republican and lifelong critic of the Federal Reserve, scored a big win Thursday on Capitol Hill by getting a House panel to pass a bill requiring new reviews of the Fed's interest-rate decisions.

The bill, which is likely to face steep opposition when it goes up for a full House vote, would abolish a longstanding exemption that shielded the Fed from Congressional audits of its monetary policy.

Supporters of the Fed's independence have argued the shields provide crucial insulation from political pressure, which would make it much harder for Fed officials to take unpopular action aimed at heading off inflation.

"If we get the audit and get the books open, make them answer the questions, I am convinced that the American people will be so outraged that then we will have reform of the monetary system," Paul has said.

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Japan's government Friday officially declared the economy has fallen into deflation and cautioned that continued price declines could spell trouble for the economy's nascent recovery.

In a deflationary spiral, consumers stop spending in the expectation that prices will fall further. Faced with falling profits, companies are forced to squeeze wages, shed jobs and cut production. That situation is very tricky to correct and can significantly harm an economy before deflation can be arrested.

Lastly, there's more bad news from the tech sector. Dell Inc. on late Thursday reported a fiscal third-quarter profit that fell 54 percent from a year ago as sales fell across all of its major business areas.

The results fell short of Wall Street's estimates for the quarter, sending Dell's stock down more than 5 perfect in after-hours trading

categories: Morning Report

6:29 - November 20, 2009

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