Federal Reserve Chairman Downplays Threat of Deflation.

By Patrice Hill, The Washington Times Knight Ridder/Tribune Business News

May 22--Federal Reserve Chairman Alan Greenspan told Congress yesterday the United States is not in "imminent danger" of slipping into a deflationary quagmire like the one that has gripped Japan for a decade.

After raising a storm two weeks ago with a statement that for the first time alluded to the threat of deflation, or a sustained fall in prices that sinks the economy into recession, the Fed chairman appeared to make light of the possibility in testimony before the Joint Economic Committee, suggesting that the chances are remote, even theoretical.

"The notion that deflation would have emerged just never entered our minds until the Japanese demonstrated to us otherwise," he said. …