From the archive

Not that it should come as any surprise, but Alan Greenspan and Co. were freaked by the "scary prospect" of deflation when they cut the fed funds rate to 1.25% in November of 2002 — the next-to-last move of the rate-cutting cycle that set off the housing bubble.

Transcripts of the Federal Open Market Committee's
2002 meetings show the panel looking to take stiff action to keep the
U.S. economy from slipping back into recession, and worried about the
prospect of deflation.

"We are dealing with what basically is a latent
deflationary type of economy, and we are all acutely aware of the
implications of that kind of economy," then Fed Chairman Alan Greenspan
said at the FOMC's Nov. 6, 2002 meeting.

We also get a glimpse of Ben Bernanke's mindset just months after he left his ivory tower at Princeton to come to Washington and bring theory to life: 

"The FOMC has been quite patient," he said. "We've
kept the funds rate unchanged now for almost a year. So I think it is
time to consider taking some action. A significant rate cut at this
point would not be a panacea obviously, but I do think it would help."

"While the economy hasn't fallen down the stairs, I
think it could use a push to make it up the next few steps," Mr.
Bernanke said.

Mr. Greenspan argued, and others on the panel agreed,
that moving by a quarter percentage point would seem "too tepid a move
for the potentially deflationary situation we face, which is a go/no-go
type of situation."

He warned that deflation "is a pretty scary prospect, and one that we certainly want to avoid."

FOMC minutes are released on a five-year lag, in case you didn't know.  That way we can examine them like Soviet archives, long after the damage is done.  Good argument for a proposal of Ron Paul's, one that stops far short of abolishing the Fed: Put the FOMC meetings on C-SPAN.