Inflation Tame Despite Record Borrowing - CPI for January 0.20%

So far, although the government has been printing money, inflation as measured by the CPI remains very tame. It rose only .20% in January and almost all of that rise was due to energy costs. Core inflation, which strips out food and energy actually fell by .1%.

Inflation has remained very tame over the past 3 years

For the year, inflation rose 2.6%. Here's what has contributed to this 12-month increase:

• The food index has declined .4%.
• Energy has risen 19.1%.
• All items less food and energy have risen 1.6%.

In the absence of an increase in oil prices, there is no inflation in the economy. The total lack of inflation explains why the Fed can keep rates low for as long as it wants and why the government can continue to print money. A lack of demand and high unemployment contains costs, and a strong demand for Treasuries keeps interest rates low.

There is no sign that this dynamic is going to change anytime soon. That means continued low rates on deposit accounts as well as fixed-income securities.