If you're the kind of person who is perpetually worried about the future, you may have a promising future ahead in banking and finance. With investments on the line every day, if you wait for bad news to arrive before taking steps to protect yourself, it can be too late. And in developed economies, there are few things that can wipe out the value of investments more quickly than inflation.

That's why bankers and investors everywhere, and especially in the Federal Reserve, remain ever vigilant for any signs in the economy that price levels are about to accelerate.

Yet in recent years, outside of a few false alarms from the energy sector, it’s been a very quiet watch.

In retrospect, it’s easy to see that there have been a number of powerful forces helping to keep prices in check in the U.S. economy over the last half decade. Technological change brought us falling prices for increasingly powerful communications information processing equipment and services. Booming trade with Pacific Rim businesses gave us cheap imports and helped keep domestic prices in check. And even the sharpened retail competition in markets penetrated by low cost goliaths like Walmart have had a measurable impact on price restraint.

The result has been an inflation environment that is nothing short of astounding. As measured by the deflator for Gross Domestic Product, prices across the economy actually fell at a 0.1 percent rate in the final quarter of 2001, before nudging up at a paltry 0.8 percent annual rate in the first three months of this year. In six of the last ten months, wholesale prices have fallen, leaving the Producer Price Index for April 2.1 percent lower than its level of one year ago.

But when inflation hawks turn their critical gaze on the economy, the question always is, what will happen tomorrow? And there are clear indications that their discomfort level has gone up.

For one thing, the price of gold, long viewed as an inflation hedge, has been climbing since the close of last year. The roughly 15 percent appreciation in price coincides with the news of the ramp up in government spending that has helped the Federal budget surplus go up in smoke.

Another note of caution is being sounded by the Federal Reserve. While its closely watched decisions on short-term interest rates have professed a neutral stance towards economic stimulus, its daily trading in bond markets reveals a different attitude. After pumping up the money supply at a vigorous 15-20 percent rate for much of last year, the central bank has throttled back dramatically since February, letting the money supply grow at only a 2 percent rate since that time.

How real are the threats that have raised these concerns? Certainly they are easy to identify. Rising health care spending is pushing up compensation costs across much of the economy. Restrictive trade policies, with the threat of foreign retaliation, threaten to send prices of commodities like steel and lumber up in the months ahead. And the surge in government spending on defense will doubtless give producers more pricing power as well.

But those who bet on inflation in the stronger economy of the recent past lost out when prices weakened in spite of surging growth. Some of the same safety valves for inflationary pressure that helped out then, including a strong dollar, and healthy productivity growth, are still with us today. So we are wise to worry about renewed inflation, even if its arrival is less than certain.