What's Next After the S&P Downgrade

'But the likelihood of an inflationary spiral in a sluggish economy with a high rate of unemployment appears to be very low."

This is true to a degree, but it also means the only thing keeping the U.S. economy from entering an inflationary spiral is continued stagnation. The mountains of cash on the books with the banks, plus any additional money created by further rounds of quantitative easing, make such a spiral an inevitability.