Deflation...."D" word

[LeftHander]

Happens when the valuation of the economy is greatly reduced.

We have just seen the largest drop in value in the economy not just in terms of stocks but of the availability of credit and real estate. All which were propped up artificially for the last 6 years.

Now people are hanging onto money. Spending has almost stopped.

Wholesale prices have fallen by the highest amount since measurements have been taken, that's over 60 years...

Our entire economy has been WalMartted....

Rolling back prices across the board.

My friends, we are in for really hard times in 6 months maybe less.

[Fovea]

1. It does not look pretty

I figured that when oil started dropping.

[Nicholas D Wolfwood]

2. Deflation has to be a huge concern.

As popular as such a notion is, a movement towards isolationism would only exacerbate the possibility of rampant deflation. We need as many people as humanly possible buying our goods and services to combat this, as it truly is a far worse problem than inflation.

[Alcibiades]

3. Not to be cavalier about this

but won't some folks be helped by a little deflation? Especially folks on a fixed income? If prices drop but your income remains the same, don't you get a little richer in the process? And isn't the low savings rate and overconsuption part of what got us into this mess to begin with?

I am sure, though, that many more people, especially those forced out of their jobs, will suffer than will be helped by this.

[But....]

5. The key word is little....

I believe that this mornings news said that the price index doubled the estimated drop. Too much of a good thing is really bad:scared:

[CoffeeCat]

4. "Artificially propped up."

That's exactly right.

Our level of spending was unnatural...and fueled by people spending home equity and using credit cards.

Now, people are hoarding their cash and it's nearly impossible to obtain a home-equity loan. Credit
card companies are cutting people off, raising rates--and people are paying off those cards and not
using them as much.

This is the Main Street bubble. This is the bubble that--when it implodes--will take everything with it.