WASHINGTON (July 29, 2010)—James Bullard, president of the Federal Reserve Bank of St. Louis, says the central bank should revive a crisis-era program to buy government debt if the country seems headed toward a bout with deflation.

Bullard makes the case in comments to reporters and in a paper released Thursday.

The weak economy poses the risk that the United States could tip into a Japanese-like bout of deflation, he says.

That's a widespread and prolonged drop in prices of goods, values of homes and stocks, and in wages.

Bullard, a voting member on the Fed's main policy-setting committee, thinks the deflation risk is low.

Buying government debt would energize the economy and nip deflationary forces.

Last year, the Fed bought up to $300 billion worth of Treasury securities.