I’m not the only one worried about deflation. So is Morgan-Stanley star Stephen Roach:

According to Roach, the U.S. economy now faces two bubbles, both every bit as serious as the stock market bubble that began popping in March of 2000. The first is a bubble in consumption, financed by rising levels of consumer debt; the second is a bubble in housing. On top of that, Roach adds, prices are falling in many sectors due to oversupply. If you put it all together, it’s tough not to conclude that lowering interest rates now would only make things worse: It would exacerbate the consumption and real estate bubbles by encouraging people to buy more, and it would leave no room to lower rates after those bubbles inevitably burst.

Read the whole thing over at TNR, and be sure to follow the links, too.