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The extensive destruction of credit is also contributing to deflation, some analyst say we'll see a textbook case of deflation, the economy-wide version seen in the 1930s and to some extent in Japan 10 years ago, because the Fed is so diligent in trying to reflate the economy. The effectiveness of the Fed's efforts began to be reflected in the value of the dollar, which fell sharply on Dec. 17 against other major currencies, reaching a 13-year low against the yen.
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