Global concern about inflation, which was widespread just a few months ago, has given way to worries about an opposite and potentially more dangerous problem: deflation. Full Story »
Posted by Dan Kennedy
This is a lucid, plain-terms explanation of how widespread deflation could hurt consumers. The story would have been made richer if the reporter had left his desk to go find an example of where this is happening already -- it seems even retail store cutting prices for holiday shopping would have worked fine.
Solid, workmanlike story that shows why falling prices, far from being a good development, could actually lead to a dangerous deflationary spiral.
The reporter does an effective job of explaining deflation and why the current drop in the Consumer Price Index matters.
Really an informative primer about another disturbing aspect of the ever deepening recession. What got my attention was the phrase: "Consumer Price Index (CPI) took a rare nose dive, plunging by 1 percent in October, the Labor Department said Wednesday. That's the largest fall in a single month since 1938. "
The article finished with assurances that the global deflation is temporary and would probably be over by 2010. But given the state of the global auto industry, with the possibility of at least another million unemployed, a barren retail holiday season, deflation of home values, consumers pulling back on credit, etc., it's still a long way to the bottom.
The story clearly shows the accepted wisdom that economic growth is good, deflation bad and shows how hard everyone is working to get us back into growth mode.
Defation, as painful as it may be, lowers our footprint on the planet. The deflation we are experiencing and will experience, even if we match the depression of the 30's, will be a minor inconvenience compared to the deflation we will experience if we collapse the ecosystems that provide much of our wealth for free. Consider this. If the powers-that-be succeed in returning us to only a modest 2% growth rate, this will double our use of water, our need for wood, our use of fossil ... More »
While deflation may be a problem in theshort term, I believe market correction will fix this problem. With people selling and flipping houses at two and three times the price of the original prices, something has to give and unfortunately it starts with the low man on the totem pole.Fortunately, profit is like shit, it floats to the top.
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