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
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 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 interest rates in the coming weeks. Fed Chairman Ben S. Bernanke warned about the dangers of deflation in 2002 when he was a Fed member and Alan Greenspan was chairman.
Bernacke should resign or be removed from office; he learned at the feet of the Great Manipulator Alan Greenspan whose ego is larger than our collective debt.
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?"