What the Fed said last year it could do if deflation surfaced was one thing. What the markets heard was another. The result was mania in the bond and mortgage markets.

Some people complain they are being gouged at the pump, but raising prices now in anticipation of what might happen helps ensure an adequate gas supply.

To protect the economy in the short run, the Fed acted quickly on five fronts to provide emergency liquidity. But in the long run, no major change in monetary policy should be needed because the fundamentals of the economy remain solid.

The rapid growth in China and India has led to an increase in demand for oil, which, in turn, has driven up prices. After adjusting for inflation, a barrel of oil today costs about what it did during the 1979 oil shock.

This article first reviews methods of foreign exchange intervention and then presents evidence—focusing on survey results—on the mechanics of such intervention. Types of intervention, instruments, timing, amounts, motivation, secrecy, and perceptions of efficacy are discussed.