Once primary dealers start lending their new money, generalized inflation will be a real danger, threatening price stability.

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There has been no generalized inflation.

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David Rosenberg, the former Merrill Lynch economist, now with the Canadian firm Gluskin Sheff, has argued that the run up in commodity prices is not a forerunner of a generalized inflation because incomes are not rising and there is huge excess capacity in the economic system, as indicated by high levels of unemployment.

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