Deflation is just beginning. Not too obvious yet. Despite frantic tailoring of inventories, the closings and bankruptcies will put incredible pressure on retail pricing.
Still to be determined is whether or not food prices will follow.
What often happens when discussing inflation or deflation is that the two get confused with price increases or decreases. The increase or decrease is not inflation or deflation, but the
result of inflation or deflation. Once this is understood, discussion is more apt to avoid arguing at cross-purposes.
I agree that we are experiencing deflation (too little money chasing too many goods). This is why car dealers are offering "two for one" sales. Chain Grocery stores have greatly increased their "specials". Retailers are running continous "sales". Houses are reduced in price. Construction material is cheaper.
Some might say that this is mere "supply and demand", but the fly in that ointment is that the drop in prices for goods (and maybe services) seems to be fairly well spread across the board and appears to be nation-wide. Some might then say, how can this be when the government is churning out tons o' cash? Well, that cash is not going to as many people and much of it is being held rather than being spent. Both result in too few dollars chasing too many goods. It follows from this that there is less need for the current size of the work force. See the cycle being generated?
There is a bright spot. Falling prices are the cure for deflation if left alone.;-)
Yours,
Issodhos
