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Yesterday, my homeboys at the Federal Open Market Committee (FOMC) released the minutes of their shindig last September 21. Now, we all know that the Fed’s apparent willingness to further ease monetary policy isn’t new news. But the minutes gave us a pretty good picture as to how deep the central bank has dipped into the QE round 2 pool.

By the looks of it, the Fed is just about ready to dive in. Many of its members agreed that if the economy doesn’t show significant signs of improvement, they would “consider it appropriate to take action soon.” They went on to say that they’re ready “to provide additional accommodation if needed” and that they’re prepared to take action to bring inflation back up to more acceptable levels.

The only thing its members can’t seem to agree about is when to take the plunge. Some say the economy is struggling as it is and is just begging for more quantitative easing. Still, others believe that the Fed should wait for economic data and risks of deflation to worsen before it steps in.

I can see why these Fed officials are starting to sweat in their fancy Gucci and Armani suits. After all, recent data from the U.S. hasn’t exactly been too promising.

First, last Friday’s NFP report showed some pretty disappointing figures. The report showed job losses at 95,000, which was far worse than projections of a 5,000 decline. Many analysts pointed to the census-related layoffs as the primary reason for huge drop.

And while they acknowledged that private hiring rose by 63,000, it still didn’t matchup to the previous month’s 93,000 increase. Some economic Tweeters (is that what they’re called?) are saying that this might be a turn for the worst for the labor market.

Meanwhile, deflation remains a problem for the U.S. economy. Despite the fact that the Fed has flooded the economy with quantitative easing measures, they have yet to see the desired boost in demand. Prices are up just 1.4% from a year ago, which puts inflation way below the Fed’s 1.7% to 2.0% target inflation rate.

This is a cause for concern because when inflation falls, it makes borrowing for businesses more expensive in real terms. (Just keep in mind this equation: Real interest rates = nominal interest rate – inflation.)

Basically, if inflation is falling, real interest rates are rising. So in real terms, borrowing does become more expensive.

The FOMC meeting minutes also revealed that the Fed could change the way it communicates its policies to the market. By altering the tone and the words it uses in its statements, it could indirectly affect inflation expectations. Lower inflation expectations means an “extended period” of low rates, which is dollar negative.

Now, if you combine this with the Fed’s promise to inject additional stimulus, you can see that the Fed is really serious about the U.S.’s economic situation.

It doesn’t look good for the dollar bulls. While the U.S. experiencing a double-dip recession is unlikely, growth is still waaaay too slow. As a result, inflation remains stubbornly subdued. If the Fed continues to send strong messages of additional easing, then we just could see the dollar hit new lows…