If a recession becomes severe enough, there is the risk of deflation--nobody wants to buy anything, so vendors keep slashing prices to try to unload their inven

If a recession becomes severe enough, there is the risk of deflation--nobody wants to buy anything, so vendors keep slashing prices to try to unload their inventory and workers are willing to take lower wages to avoid unemployment. To counteract that cycle, dumping lots of money into the economy (as long as it's not too much) is just what Dr. Keynes ordered. I've also heard the argument that since businesses spent the last few years acting as if the weird bonds in their portfolios were as good as cash, then if the Treasury replaces those bonds with actual cash, it won't have a net inflationary effect. (Although I fear that Wall Street is going to take its bailout money and use the proceeds to create a silly bubble in some other asset; localized inflation, so to speak.)