This week's news of a drop in consumer prices may sound on the surface like a good deal for financially strapped U.S. households. But economists warn that sustained deflation -- a period of falling overall prices -- would deepen the nation's economic troubles. Such a period would make it harder for people to repay debts and would prompt consumers to delay purchases in anticipation of lower prices and harder times. Full Story »
Posted by Derek Hawkins
A more sophisticated and in-depth story on the effect of deflation on the economy than the one on the same topic that led yesterday's Christian Science Monitor (see links). The Post examines deflation for a range of industries and goods, and brings in some key economic experts to justify the rationale that low prices could delay economic recovery. The lead is a little kitschy, but that's just a quibble. I would expect most news consumers to come away from this with a decent understanding of the subject matter.
Does a solid job of explaining the deflation phenomenon across sectors, I do wish analysis at the end, suggesting a different root cause, would have been further expounded.
An in-depth article which uses a wide spectrum of industries, consumer spending, and retail prices as examples the dangers deflation poses to the world’s economy: consumers halting spending, unsold goods, huge inventories, reductions in manufacturing, losses of jobs, shortages of new jobs, crashing stock prices, repossessions of homes–all ingredients of 1932.
Message from earth to free-market-folly Bushies, deregulation dumbbells, and Republicans in general: those who ignore history are doomed to repeat it.
Finally we are informed about the inevitability of another prolonged Depression, and since most of us were born after the last one, analysis here begins to explain what that world resembles. What we need are financial leaders with tools to fix a service economy--from Apple to Expedia, from Starbucks to Second Life, from Microsoft to McDonald's--that manufactures little but spends much. The subprime crisis triggered a domino effect of greed, and now everyone pays the price.
The Federal Reserve has manufactured a manipulated economy, punishing those who work for a living and save for their families, cutting interest rates while believing businesses on the verge of bankruptcy will borrow money when people are jobless or in foreclosure. See the NY Times link below with the writer musing, "How could I have spent $4 for a cup of coffee?"
The mere specter of a prolonged deflationary period, which hasn’t happened in the United States since the Great Depression, is likely to steer Fed policy toward lower ... More »
Economics is a science on par with theology, in that predictionsmost often will not come to light during one person's lifetime. As Keynes stated, to the effect thatthese theories only apply in the short run, in the long run, they don't matter because we're all dead. A correction to cover the hidden inflation of the last bubble period while it may be painful, is entirely necessary. Greed and speculation 's price will be paid by all, not the beneficiaries.
The issue is less price cutting, it seems to me, than no sales," said Edwin M. Truman, a longtime Fed and Treasury official who is now a senior fellow at the Peterson ... More »
At a time when so people understand exactly what is happening in the financial markets, it is refreshing to see someone connect a few dots. This story did a good job at showing how interconnected the economy is, and how one aspect directly impacts others. A wide variety of sources helped prove this point.
An excellent article, lots of current data and sensible scenarios for the possible changes in the future. Does an excellent job regarding business sector impacts. Good clear view and well presented.
Deflation is the other side of a market collapse, which many forget can accelerate a downward spiral radically. Deflation is rare, but calamitous.
Economists said the Fed might buy mortgage-backed securities or long-term government securities as part of some new strategy. More »
A very good summary of where the economy is going and the unbending attitude of the powers that be to get us on the growth escalator again.
The suffering from this period of deflation will be as noting compared to the deflation we will experience if we collapse the systems that provide many of our needs for free. Watersheds provide clean safe water for free. The Carbon dioxide feed back system provides us with breatable air at a reasonable temperature. Forests provide trees for cutting down for free and so forth. This period of deflation might just have come in time to save us from ourselves if we can make use of it. ... More »
An error is that the cost of tar sands oil production is $35 to $45 per barrel, not $65 as claimed in the article. Prices could probably fall far below $35 before production would be cut back. Obama's taxing plans make zero sense if there is deflation, an important point not mentioned.
The old thinking is out the window. The idea that the rich get richer and the poor get poorer is now obviously very, very wrong. All the leftist thinking does not make any sense, if it ever did. Obama is presented with an opportunity to screw up big time unless he forgets his ideology.
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